The upward turn in rates tenses the commercial plan of the mortgage bank

Yields in the debt market rise at breakneck speed and the Euribor registers a rally of enormous dimensions this February. In the daily reference, the latter has already broken the level of -0.3% -with monthly lows of -0.283%- and shuts up those who, when 2022 began, affirmed that it would hardly move upwards in a year of transition. There would be smooth climbs, yes, but they were transferred to the final stretch of this year.

“It would be a real miracle if the Euribor ended positive this year, but now the expectations that it will reach zero in 2023 are much higher. That means that in these months we are going to have to change the commercial plan in mortgages. It is already unsustainable to maintain the demolition prices that we offer at a fixed rate and we will have to start giving more scope to the variables. With the Euribor on the rise, they are now much more interesting for us”, they point out in a large entity.

In the banking sector they are already licking their lips with the increase in income that comes from the hand of live variable mortgages. Despite the great effort that banks have made in recent years -and with total success- to promote the fixed rate, four out of five outstanding mortgages in Spain, equivalent in round numbers to some 400,000 million euros, depend on the Euribor. And all those that are reviewed from now on will begin to fatten the income of the banks after the great drought.

“The problem will be convincing clients that they have to buy the variable mortgage that we have been saying for five years was less attractive than the fixed one. In this last modality we are offering rates even lower than 1% that are simply extraordinary for the client. And much more now, that the types are going up. If we start to raise prices now, the customer may feel cheated,” sources in the sector point out.

New strategy change

Sell ​​the opposite of what has been advertised until now. That is the new slogan in the commercial banking networks. And to avoid contradiction, it is necessary to make the shop window pretty. Bankinter has been the first to reduce the prices of its variable mortgage, which with a new differential of 0.85% over the Euribor has entered the ‘top 3’ of the best offers on the market. And to reinforce the message, the bank has raised fixed mortgages.

More timid has been the reaction of BBVA, which has also lowered the fixed rate that applies the first year of the variable loan – a security mechanism that during these years has served all banks to cover themselves from a Euribor at historical lows – to the 0.99%. They are the first forays in the sector in this new roadmap that consists of positioning itself in loans that will generate more income in the medium term.

“The big problem is that the rise in the Euribor has caught us on the wrong foot. No one expected such a sharp move higher, and sometimes we just don’t have the guts to completely turn our strategy around in such a short amount of time. Now we have to combine sales of fixed rates, which with these prices and the Euribor rising, customers take us out of our hands, with cheaper variable rates. It will be necessary to make balances with prices”, they point out in one of the entities with the best offers.

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