Record High Interest Rates for Renegotiated Mortgages in June 2023: Strategies for Success

never before renegotiated mortgages between the client and the bank or financial concessionaire with such high interest as in this month of June 2023. According to the data published by the Bank of Spain and consulted by Europa Press, they reached 4.06% interest, 0.18% more if compared to May. This is the highest figure since 2014, the year in which it began to publish the interest rate data for mortgage loan renegotiations in 2014.

The main culprit for this is none other than the European Central Bank, which has entrenched itself in up to nine consecutive rises in interest rates since last year as its main strategy to combat inflation. Thus, by making money more expensive, he intends to cool the economy and bring the inflation rate in the eurozone to 2%.

The increase in the cost of variable mortgages, with a Euribor that already exceeds 4%, is its main collateral damage. What forces to look for alternative solutions to weather the economic storm, looking for other methods to deal with a ‘kinder’ mortgage.

How are the average interest rates?

With a average of 3.75%, June interest rates climbed four basis points in one month. If compared to the month of June 2022, mortgage renegotiations were signed with a rate of 1.96%. Almost 2% more. Leaving aside renegotiations, the new mortgages for June were granted at an average interest rate of 3.72%, three basis points more.

It highlights that the total volume of mortgages (for a value of 5,284 million) granted in June toincreased by 2.7% rlook forward to may Of those 5,284 million, 419 million corresponded to renegotiations, which increased by 2.4%. In addition, it is concluded that the mortgage balance for the month was negative, since the production did not exceed the amortized amounts. In this way, the outstanding balance of the mortgage portfolio in Spain stood at 501,577 million euros, which represents a net amortization of 1,080 million and a decrease of 0.2%.

Keys to renegotiating a mortgage successfully

Renegotiating a mortgage means renegotiating the terms and conditions of an existing mortgage loan with the financial institution that granted it. The objective of the renegotiation may be to obtain better financial conditions, such as a lower interest rate, modify the term of the loan or change the interest rate, among other aspects. Some common reasons to renegotiate a mortgage can be:

• Benefit from lower interest rates: If interest rates have dropped since the mortgage was taken out, renegotiating may result in a more favorable rate.
• Reduce the monthly fee: By extending the term of the mortgage, it is possible to reduce the monthly payment to be paid, which can be useful if you are facing financial difficulties.
• Change interest rate: If a variable interest rate was initially chosen, it is possible to change to a fixed rate to have greater stability in payments.

It is important to take into account that the renegotiation of a mortgage may be subject to certain conditions and expenses, such as commissions or administrative expenses. In addition, the financial entity may require that the applicant meet certain eligibility criteria in order to access the renegotiation. From the financial platform ‘Asufin’ it is recommended to go directly to the financial institution to obtain specific information on the available options and the necessary requirements in each particular case.