So far this year the Euribor has risen by 3 percentage points, from -0.49% to 2.6%. An increase rate much higher than that also recorded during the real estate bubble, in which the index took three years to follow the same path, going from 2.17% in September 2005 to 5.5% in October 2008. other words, that mortgages have become more expensive in recent months at a much higher rate than they were then. However, the current figures are still a long way from the all-time high.
In this sense, more and more variable mortgage holders are considering going to ask their bank for the possibility of changing their contract from variable to fixed. Most mortgages are reviewed every year, so the continued increase in the Euribor is having a direct impact on the mortgage payments of Spaniards. Six months ago the main variable mortgage benchmark index went from negative to positive. Today an average variable mortgage of 150,000 euros for 25 years and due for revision will cost 228 euros more per month, for a total of 2,735 euros more per year. That is why some consumers are already negotiating with their bank to switch to a fixed interest rate.
Vicenç Hernández Reche, CEO of Tecnotramitas well as president of the National Association of Estate Agents (ANAI) and the Association of Estate Agents of Catalonia (AIC)contextualizes the numbers and ensures it “Current interest rates are moderate taking historical series into account. It is true that coming from a period of time of several years in which the Euribor has been in negative territory, it now seems that they are an obstacle to correct financing, when this is not the case.”emphasizes the expert.
The transition from a floating rate to a fixed rate is possible and very interesting for new mortgages
In a context of more expensive mortgage financing due to the rate increases promoted by the European Central Bank (ECB), a borrower can change the interest rate that regulates his mortgage. It must be taken into account There are almost no fixed rate mortgage offers with an interest rate of less than 3%. However, and although it is not the same interest that could have been signed six months ago, the owner will gain in stability in the monthly cost of your mortgage, as everything points to this upward trend continuing in the coming months. “For this reason we advise not to wait and, in case of finding a competitive mortgage offer, to sign as soon as possible”warns Hernández Reche.
“You can always negotiate the terms of a mortgage during the term of the mortgage agreement. Naturally, the circumstances of the mortgage lender and his financial standing must be taken into consideration. In any case, in the final analysis, the transition from floating rate to fixed rate will depend on the will of the bank”, indicates the managing director of Tecnotramit. The costs of negotiating with the bank to change the interest rate range from 500 to 1,000 euros.
From the company, one of the most important in Spain and Portugal specialized in providing services to financial institutions and real estate companies, they also insist that you have to take into account when the mortgage was signed. “In the event that the mortgage was signed a few years ago, the transition from variable to fixed can be much more interesting, since that is where most of the interest is paid. Newer mortgages have a much more noticeable effect from rate hikes, while those that have shorter maturities will notice less of an impact.says the company’s CEO.
