Sumar recommends creating a fixed mortgage with regulated interest | HelpMyCash

Several of the media have accepted a proposal launched by Sumar‘s political party. The formation led by Yolanda Díaz presented a non-law proposal on Friday create a fixed mortgage with the regulated interestthat is, not specified by banking organizations. This product, in theory, would have to be offered by all banks in Spain.

At this time, this proposal has been presented to the Congress of Deputy Ministers and we do not know whether it will come to fruition or not. But in case it is approved, in this article we will explain What would be the terms of this regulated mortgage loan?.

What would this regulated fixed mortgage look like?

The opinion of Sumar, according to the newspaper The Countryto end the historical dominance of variable mortgages over fixed ones. The group believes that with the drop in Euribor, banks will be tempted to offer more variable rates than fixed rates, which could harm consumers if this index rises again .

To mitigate that risk, Sumar plans to create a regulated fixed mortgage that all banks must offeralong with its own mortgage offers. Its conditions would be as follows:

• And fixed interest equal to that of Spanish ten year bondalthough this may not be less than 1% APR.
• And maximum repayment period of 30 yearsthat is what most banks offer at the moment.
• And has been introduced maximum equal to 80% of the home valueand so are most fixed mortgages.
• No opening costs or for early repayment.
• And the French depreciation system (the most common in Spain, with fixed fees) the German (with lower costs).
• some access requirements set by law: having a stable employment situation and not dedicating more than 40% of the monthly income to pay the mortgage payment.

In addition, those people who already have a fixed mortgage can switch to the regulated one, as long as they meet the requirements to access the product.

This is how the interest rate on the 10-year Spanish bond has evolved

The most important thing about this regulated mortgage loan, as you have already seen, is that its interest will be based on the Spanish ten-year bond rate, which is the price at which the State sells its debt with a repayment period of ten years.

To give you an idea of ​​how much this fixed mortgage suggested by Sumar would cost you, in the following table you can talk to the evolution of the average rate of the ten-year Spanish bond in the last ten years:

* Temporary value. Fountain: Directorate General of Finance and Financial Policy

This interest depends, to a large extent, on the European Central Bank Rates (ECB). When the ECB reduces them, the interest on the bonds also falls, because the State sells its debt more cheaply (with a lower yield). And when it rises, the bond of Spain is more profitable, because Spain forces them to sell the most expensive debt.

What is the current interest rate on fixed mortgages?

According to market research conducted by HelpMyCash analysts, the current average interest on fixed mortgages offered in Spain It is about 2.95%. That is to say, if this regulated fixed mortgage were launched today, its price would be slightly higher than the price of commercial offers.

Now, in former times (between 2019 and 2021, for example), you would have paid less with the regulated fixed mortgagebecause his interest would be 1% APR and the interest of the commercial offers was higher than that price. So the product suggested by Sumar may or may not be good for you depending on the market conditions.

As we said before, we don’t know if this illegal proposal will be approved or not. But in the meantime, there are fixed mortgages with a very competitive interest rate, around 2.50%. If you want to know which banks offer these rates, you can check the HelpMyCash comparison:

Mortgage Commissioner