The amortizations of home mortgage loans in our country rise. According to the latest closed data from the Bank of Spain and the Spanish Mortgage Association, advance payments in the past month of February shot up 48 percent with respect to the same month of 2022.
In total, they generated amortizations worth 7,200 million euros. Clients with sufficient liquidity therefore took the opportunity to cancel part or all of their debt with the bank
For experts, this practice has increased due to the rise in the Euribor, which in May stood at 3.86 percent. The forecast is that it will continue to rise and rates are not expected to moderate until 2024.
The cancellation of the loan is at zero cost since November
“For people who do not have an immediate need for liquidity paying off indebtedness is an interesting operation,” points Santos Gonzalez, President of the Spanish Mortgage Association. “In addition”, he continues, “the cost is zero”, since the Code of Good Practices signed by the Government and financial institutions includes among its measures that the cancellation of a variable mortgage will have no cost.
Raise of almost 300 euros
And it is that the rise in rates since March 2022 has led to a considerable increase in the monthly fee. In a variable mortgage of 150,000 euros over 25 years, the average rise is between 250 and 300 euros.
If we can’t pay off the mortgage, another option is change from a variable rate to a fixed one, but from the consumer associations they warn that the banks will not make it easy. In the words of Robert Serrano, spokesman for UCE Extremadura, “with the Euribor so high, financial institutions are offering fixed-rate mortgages with very high interest. So now maybe it’s too late to change our variable mortgage to a fixed rate.
“Perhaps it is too late to change from variable to fixed rate”
The spokesman for UCE Extremadura does see a repayment of our housing loan as more favourable, but explains that it is more advisable “if we are in the initial years of the mortgage”. The majority mortgage amortization system in our country is the French system, “for which we pay a lot of interest at the beginning of the mortgage and this trend is reversed as the end of the loan approaches,” says Serrano.
Rise in surrogacy
Negotiating the mortgage from scratch with our bank or changing it to another entity, that is, subrogating it, may be other alternatives. On this last case, Surrogacy in Spain doubled in the first quarter of this year.
But from UCE Extremadura they point out that “it is a perhaps difficult time to carry out this type of operation, since the banks are greatly restricting credit and are increasingly demanding when it comes to granting improvements in conditions.” However, Roberto Serrano does not rule out exploring this possibility, since many entities also try to attract new customers through aggressive and more profitable business strategies for the consumer.
2023-06-04 19:55:12
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