Turning, minimum, in the Euribor. After closing February with a slight increase, the first since June and leaving historical lows, the arrival of a change in trend has the mortgaged in suspense. Some already think of the end of an atypical era for variable rate mortgages.
Nothing is further from reality. Experts see no major cause for concern, at least for now. Until the exit from the crisis is consolidated, the bet is on an index that will remain negative, the best outlook for the client.
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“It is still too early to see if there is a change in trend, and it is not expected to rise too much, or vary as much as last year,” says Silvia Escámez, co-founder and director of Prohipotecas.
The slight rebound comes from the improvement in expectations in the heat of the economic improvement and the advance of vaccination, but the entities work with Euribor scenarios at -0.40% throughout 2021, even in 2022. “We hope that it remains in negative territory this year, although it is tending to stabilize, ”says Simone Colombelli, director of mortgages at iAhorro.
Those who have their loan referenced to the index “will continue saving”, at least for a while, since the rates are lower than any reference of half or a year ago, which is changed when reviewing the installments. Even with the rise, you will pay less. Therefore, he sees the variable mortgage as the best option for short or medium-term loans.
New construction flats, in a stock image
But in the market, in these five years of negative Euribor, banks have pushed towards fixed-rate mortgages. It is not the business of the century, if they make money, but with them they manage to attract customers “for longer.” “The added value that you get when you sign a mortgage with a client is to retain it for a period of time, generally long. And that will lead to the transfer of other products such as accounts, insurance, payroll … ”, argues Colombelli. There he would get a slice.
Escámez believes that it continues to be a low profitability, so that banks will raise prices in the types or products linked to fixed mortgages, especially if they have to cover themselves from greater delinquencies due to the crisis. “Although they will continue to be recommended in the long term,” due to low interest and “because you don’t know what will happen in 30 years,” he argues.
Perspectives
How to get out of the crisis and the ECB’s strategy shape the future of the index
Several factors will depend on that future of the Euribor. The main one, a rise in interest rates from the European Central Bank (ECB), something ruled out in the short term.
In iAhorro also points to the way out of the crisis. “The faster the recovery, the faster we will see the Euribor stabilize. In a positive environment the indicator tends to rise ”. Thus, vaccines, stimulus plans and a return to normality will mark the step. At the moment uncertainty reigns and the ECB has no intention of raising rates. “The fees will remain very low.
But in the medium term, in two or three years, things can change. If the European economy experiences a significant improvement, inflation could skyrocket. And if it exceeds 2%, the maximum limit set by the ECB to guarantee price stability, it could raise rates to stagnate it, which would make the Euribor rise ”, warns Miquel Riera, mortgage expert at HelpMyCash.com. The opposite may also happen, that the rebound is moderate and even the forecasts that see the Euribor in negative until 2030 are fulfilled.
Blocks of flats
In any case, for the most distrustful there are several ways to cover themselves from a hypothetical escalation. One is to switch to the fixed rate, reviewing the conditions with the bank or with a subrogation –change the entity credit–, Riera explains. Another is to agree to an upward limit on the interest that is applied, to avoid a strong rise if the Euribor shoots up, although the bank may force to contract something in return. Finally, you can opt for an additional product that limits upward and downward increases, “but they are complex and cost money, they are not advisable if they are not understood,” he warns.
Surrogacy stands as a great way out. From Prohipotecas they point out that they have grown 30% in the last year, especially to go from variable to fixed rate. “The moment is unbeatable. Not doing it with current rates if our conditions have worsened in recent years would be wasting a great opportunity ”, believes Colombelli. The wind still blows in favor of the mortgaged.
The ups and downs are left behind
The mortgage index experienced greater fluctuations in 2020, with an upward quarter that brought it closer to positive territory in May, with -0.081%, according to the official statistics of the Bank of Spain. Influenced by the outbreak of the virus and the slowdown in the economy, it was now a long way off. Since then, declines have continued to the low of -0.505% in January.
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