The new rate increase by the European Central Bank once again puts potential buyers of a new home ‘on the ropes’. According to the Spanish Mortgage Association (AHE), the average interest rate at which banks granted mortgages in Spain in August registered further increases to stand at 4.237%, the highest level in the last 14 years. The Euribor, the reference index for variable rate mortgages, is not far behind and rises to its highest levels since 2008. This Thursday it stood at 4.224%. In this context, the ‘boom’ of mixed mortgages seems to have a long haul.
With the highest Euribor in the last decade, some of the future mortgage holders could choose to apply for a fixed rate mortgage, however, at the moment they are almost as expensive as the variable ones. The best current fixed rate offer is sold by BBVA with a 2.90% TIN. Thus, the most attractive alternative for many seems to be the mixed type mortgage. This loan contains fixed interest for the first 5, 10 or 15 years, and then becomes variable. However, they also have some drawbacks, such as the harm that the client would experience if the benchmark index fell. Furthermore, mortgage holders do not have long-term stability either since they cannot predict what the installments they will have to pay will be in recent years.
The Kelisto.es comparator points out the mixed mortgages from Ibercaja, Cajamar, EVO Banco and Openbank as the best on the current market. The Ibercaja Mixed Mortgage is the best of those offered, with a fixed interest of 2.25% for a period of 5 years. Once this period has ended, the interest rate becomes Euribor plus 0.80%, in a maximum variable interval of 20 years. To obtain the indicated variable rate, income and receipts must be direct debited, in addition to subscribing to the entity’s home and life insurance.
Cajamar, with the mixed type HipotecON, is also a great alternative. The financial institution offers the mortgage loan with a fixed interest of 2.4% for the first 5 years. From then on, the interest rises to the reference index plus a differential of 0.5%, within a maximum period of 25 years and provided that the payroll is domiciled, cards are used, insurance is taken out and subscriptions are made to shares in mutual funds. investment.
For its part, Bankinter’s digital bank, EVO Banco, provides a fixed 2.45% for the first 5 years with its Mixed Smart Mortgage. Afterwards, the mortgaged party will pay Euribor interest plus 0.6% for 25 years. As conditions, it is requested to domiciliate the payroll and take out home and life insurance. Finally, Openbank presents its Mixed Mortgage with 2.63% interest for a fixed term of 10 years, and the product concludes with the Euribor plus 0.55% for a maximum variable period of 5 years. The rates are discounted for direct depositing income and taking out home and life insurance from the bank.
Specialists expect an increase in hiring
”Mixed mortgages will continue to be the type of mortgage that is most sold in Spain. The fact of being able to get a reduced fixed rate in the first years, with the Euribor at its highest, is a good decision,” says Pedro Ruíz, personal finance expert at Kelisto.es. Although, he clarifies that depending on the product, each bank offers different conditions.
Miquel Riera, mortgage expert at HelpMyCash, follows the same line as Ruíz. He considers that mixed-rate mortgages will continue their growth during the last quarter of 2023, although they expect initial fixed interest rates to rise after the latest ECB rate hike. Even so, he clarifies that they will continue to offer competitive conditions to achieve an increase in signatures.