The rise of the Euribor does not stop. According to the latest data, it stood at -0.33% in the month of February, which means an increase of 0.171 points comparing it with the same month of 2021. The price increase caused by inflation and Russia’s attack on Ukraine may be the cause of this change in trend.
And what consequences can it have? mortgage market? “We have lived a month with a lot of fluctuation in the Euribor when all the forecasts pointed to stability. The change of speech of the president of the ECB caused by the high inflation that Europe is experiencing has pushed the Euribor towards zero. If this trend continues and the change in the economic strategy were confirmed, it would be a setback for families, since their mortgage payments would increase and they would lose purchasing power”, warns Simone Colombelli, Director of Mortgages at iAhorro.
The banks have already begun to move, especially as far as fixed mortgages are concerned. Many of the entities have decided to start raising rates to bet on variable rate loans. However, there are entities that are waiting, as is the case of EVO with its fixed mortgage. It maintains a TIN of 1.24% and an APR of 1.73% as long as the user directs the payroll, unemployment benefit or pension of more than 600 euros and takes out two insurance policies (home and life).
Sabadell It has also opted for this route with a TIN of 1.39% and an APR of 2.58%. In this case, the bank will request that the payroll be directly deposited and that three insurance policies be purchased (home, life and payment protection).
For its part, Santander It continues to have one of the most competitive fixed mortgages on the market despite the fact that interest has risen by 0.10%. In this way it has a TIN of 1.35% and an APR of 2.52%. The bonuses required in this case would be direct debit payroll, pension or self-employed fee; use the credit card up to six times and take out four insurance policies (home, life, accident and disability).
How it affects fixed-rate mortgages
How will this rate hike affect people who are currently looking at a fixed rate mortgage? The key is that the future owner has the FEIN (European Standard Information Sheet). “When the citizen already has the FEIN of his entity with all the details of the offer, no modifications can be applied, so it is very interesting to have it tied as soon as possible,” explains Colombelli. This means that, if in that document a type of interestthe bank will not be able to change it even though it has decided to raise rates.
Therefore, in the case of fixed mortgages, It is important to speed up the search process, since, in this way, users will not be affected by the rate hike that is beginning to be seen among these loans.
Banks begin to lower variable mortgages
As interest on fixed mortgages goes up, the variables begin to show more attractive conditions. Bankinter, for example, has lowered its interest by 1.47%, therefore, it has a TIN of Euribor +0.85% (1.25% during the first year) and an APR of 1.90%. In exchange, it asks customers to create a Bankinter account, acquire a pension plan and take out two insurance policies (life and home).
BBVA has not been left behind either and has lowered the conditions of its variable mortgage by 1.15%. In this way, users who take out this mortgage will have a TIN of Euribor+0.89% (0.99% during the first year) and an APR of 1.36% in exchange for direct debiting their payroll and purchasing two insurance policies (home and amortization of the loans).
Some banks have decided to wait to see how the Euribor evolves. ING, for example, continues to offer a TIN of Euribor+0.89% (1.99% during the first year) and an APR of 2.65%. The links required in this case are direct debiting the payroll and taking out two insurance policies (life and home).
In short, the mortgage market is in an unstable moment, awaiting the decisions made by the European Central Bank (ECB) on inflation and how Russia’s attack on Ukraine is resolved. We will have to see how the Euribor evolves soon.
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