The incessant scale of the Euribor is causing significant changes in the Spanish mortgage market. One of them is that more and more people are looking for alternatives to improve or change the conditions of their loan and save some money. In fact, Spain is the third country in Europe where more subrogations or novations mortgage, only behind Ireland and Slovenia, according to data from iAhorro. The online platform estimates the percentage of mortgages that underwent modifications during 2022 at 35%, eight points more than in 2021.
Of the total, 19% of the changes consisted of novation and the remaining 16% of subrogation. The first operation consists of changing the conditions of the loan after reaching an agreement with the same bank where it is contracted. With subrogation, for its part, this change in conditions can also be made, but Transferring the loan to another bank.
“Most of the people who want to change the conditions of their mortgage to improve them ask, first, a subrogation, but entities prefer cancellationsthat is, cancel the existing mortgage and open a new one with other conditions”, explains Simone Colombelli, director of iAhorro Mortgages, who adds that one of the reasons is that “mortgage cancellation is a more expensive process for the user , since they have to start the whole procedure from scratch, but the bank also earns more”.
Regarding the mortgage market of the Old Continent, Ireland leads the total percentage of changes, with an increase of 44% (39% novations and 5% subrogations). It is followed by Slovenia with an increase of 41% (33% novations and 8% subrogations). At the bottom of the ranking are Germany (15%), Cyprus (15%) or Austria (13%), where the mortgage has much less weight than the rent due to the difficulties that the granting of the loan entails in these countries. It should be noted that in addition to the aforementioned countries, in others the figure of surrogacy as such does not exist, so this type of operation cannot be carried out.
If we look at the evolution of the changes by year, we see that Spain has gone from occupying fifth place in the ranking both in 2020 (30%) as in 2021 (27%), now positioning itself in third position, ahead of both France and Malta. In addition, as far as changes are concerned, despite the fact that in 2021 our country experienced a small drop of three percentage points over total mortgages compared to 2020, in 2022 it rose eight points, partly conditioned by the rise in the Euribor and the increase in the cost of variable-rate mortgages.
In Spain, the main objective of the change is to save. In fact, from the mortgage comparator they explain that this change in mentality is “relatively recent” and has increased at the time when the Euribor began its rise -April 2022-, at which time the reference index of the variable mortgages returned to positive values after spending more than six years in negative.
Mortgage changes are greatly influenced by the Percentage of home ownership in each country. In the last places on the list, and well below Spain (76.20%), are precisely Germany (51.1%) and Austria (55.2%), which do not even reach 60%. of owned homes. In third place from the bottom is Denmark (60.8%), followed by Sweden (63.60%) and France (64.10%).
On the contrary, we see the highest percentages in Eastern and Southern Europe: Romania (95.8%), Hungary (91.7%), Slovakia (90.9%) and Lithuania (90.3%). .
Between 25 and 30 years
It is important to take into account the repayment term that mortgages have depending on where they are contracted. According to Simone Colombelli, “usually, mortgages with shorter durations are more likely to be canceled and replaced with new ones, while mortgages with longer repayment terms are more likely to be modified.”
Thus, although there are differences between countries, the average duration of mortgage loans in Europe is between 25 and 30 years old. Of course, this time is higher in countries like Malta, Portugal or Ireland, where it can reach 40 years on average; or smaller as in Greece (15-20 years) or France (19 years).
