Mortgage lending fell another 22.3% in October as interest rates hit their highest level in 2015.
Euribor, the index to which most variable rate loans are referenced, is poised to delight current and future mortgage loan holders. The indicator closed the month of December at 3.67%, after recording the lowest monthly increase in 22 months. If this trend continues (and with a rate cut from the European Central Bank planned for next year), there are indications that it could lead to the first reductions in variable rate mortgages in the first half of the year. So, if Euribor-linked mortgages become cheaper, experts say it would be logical to think that fixed mortgages will also become cheaper.
However, for this to happen, it is also important for the ECB to reduce official interest rates. However, so far, this is not the case. “At the moment we are still seeing fixed mortgages at around 3% for good profiles, mixed mortgages with a fixed period of around 2.5% and variable mortgages with very low spreads. In addition, depending on the evolution of Euribor and ECB interest rates, mortgage loans could become cheaper”.
Precisely, at the end of the year, we have already seen that entities have introduced changes at a slower pace in mortgage loan offers, and that there have even been slight decreases in fixed rate loans for the purchase of housing. The average interest rate for fixed-rate mortgages was 3.08% in December, compared to 3.468% in November. “The end of the year is generally a crucial period for banks commercially, and the movements they have made in recent weeks in their offers generally respond to their desire to capture the last customers of the year.” The fall in Euribor is forcing banks to review their fixed rate and mixed rate mortgages.
“However, given the evolution of Euribor and in anticipation of what could happen in the short and medium term with interest rates, it is very likely that we will continue to see reductions, particularly on fixed rate offers, from mid-January, with a return to routine after the Christmas holidays”
The interest rate for fixed rate mortgages should be 2%.
Fixed rate mortgages were king before the rise in Euribor. Banks favored them when the index was negative, which represented 70% of signatures. When Euribor started to rise, mixed mortgages took over, starting with a fixed interest rate of around 2.50%. According to Trioteca, mixed loans, which experienced unprecedented growth in 2023 compared to 2022 with an average weight of 35% of companies, will lose market share in 2024 to the benefit of the former.
In fact, they expect fixed mortgages to dominate the mortgage market in 2024, after this type of mortgage fell by 36.5% in 2023 compared to 2022, with 60% of mortgages formalized. In 2024, financial institutions will clearly focus on the fixed modality. Where might these interests lie? Tripteca calculates that the price of these loans could fall to 2.5% by the end of the year.
Colombelli is of the same opinion. “It is interesting to remember that in a context where the Euribor was higher than 4%, we were still seeing fixed mortgages lower than 3% NIR for very good and very solvent profiles, so in a few months we could see fixed mortgages at 2% and these would be very good deals for all future mortgagors”.
Among the best fixed rate mortgages, with interest rates around 3%, Banco Santander, with 2.80%, and BBVA, with 3%, stand out. The first has already reduced the price of its mortgage in November and to take out its loan it is necessary to have four products, while the insurance reduces it to three. Another interesting fixed rate mortgage is that marketed by Openbank, with 3.02%.
2023-12-30 16:31:17
#Euribor #cut #fixedrate #mortgages #cheaper
