The Rise of Mixed Mortgages in the Spanish Mortgage Market

The mortgage market continues its transformation. The dizzying rise of the Euribor has caused a radical change in the supply and demand of mortgages. The index to which most variable mortgages are referenced has been above 4% for four months. With this data, one might think that fixed mortgages are being the favorites of Spaniards. But the entry of mixed mortgages means that fixed mortgages have been at a minimum for just over two and a half years.

According to data from the National Institute of Statistics, 57.8% of the mortgages signed in July were at a fixed rate. The lowest percentage since March 2021, when fixed lines accounted for 56.6% of the total. There are several reasons why fixed rates decrease. The first is because financial entities take advantage of citizens’ fear of contracting a variable, which depends on the Euribor and in one year the monthly fee can increase by 200 euros, to make this product more expensive.

The second reason why fixed mortgages have fallen has been due to the rise of mixed mortgages, those in which you pay a fixed rate for a few years and the rest at a variable rate. These products have a variable part and a fixed part and are attracting the attention of Spaniards, but also of financial entities that increasingly offer them. However, INE statistics do not discriminate against these mixed mortgages and include them in the variable category. Thus, Of the 12,333 mortgages categorized as variable, it is not known how many are mixedbut the institute does point out that “they are a subset of the variables, but we have no way to distinguish them.”

Despite the lack of specific data, this growth in mixed mortgages is seen in financial institutions, which are relaunching this product. In the case of ING, the entity transformed its variable mortgage offer a few months ago so that it had a fixed part. And it is already having its results, since between July and August, 58% of clients chose a mortgage with these characteristics. In general terms, around 50% of ING clients opt for a mixed mortgage, especially for fixed terms of 5 and 10 years.

But ING is not the only bank that has decided to bet on mixed mortgages. The last to do so has been Bankinter, although they clarify that it is not a mixed mortgage per se, since the Dual Mortgage types, as they have called it, coexist throughout the entire life of the loan. This Thursday, the entity launched a product that combines, as explained in a statement, “the advantages” of the fixed and variable mortgages.

The Dual Mortgage It allows clients to define from the beginning of the loan what percentage of the mortgage will work in variable mode and what part will work in fixed mode, each with its respective particularities. In this way, the percentage of capital in the fixed modality will be amortized at a fixed interest rate throughout the life of the loan, while the variable part will do so as is usual in this type of mortgage: with a fixed exit rate for the first 12 months of the loan and, afterwards, an annually reviewable rate referenced to the Euribor + a differential established by the bank. The sum of both amounts will make up the monthly payment of the Dual Mortgage.

In this sense, the client will see a single monthly fee charged to their checking account, although the loan information will contain a breakdown of how much of that fee corresponds to the variable tranche and how much corresponds to the fixed tranche, as well as the interest rates applied. in each case.

CaixaBank and Banco Sabadell also decided in recent months to launch a mixed mortgage. CaixaBank had, until now, only fixed mortgages, the product on which the entity is committed. However, from now on the entity also has the mixed mortgage that offers a fixed 5-year section and a variable rate for the remaining years of the mortgage according to Euribor plus a differential. The entity recommends this product to clients with a comfortable financial position (for example, Premier Banking or Private Banking clients), who ensure an initial fixed rate and at the same time can assume installment increases in the event that rates rise. “The usual recommendation for individual CaixaBank clients continues to be the fixed mortgage,” they say from CaixaBank.

These offers now join those of other entities such as Banco Santander, Openbank, Evo Banco, Unicaja, Ibercaja, which also, in recent months have highlighted how their hiring has skyrocketed. According to the 37th Tecnocasa Housing Report, mixed-rate mortgages have more than doubled. In the first half of the year, 30% of new mortgages were of this type compared to 14% in the previous half.