Banks Shift Focus to Fixed Mortgages in Efforts to Revive Business and Combat Activity Slump

Banks are changing their commercial policy and are once again betting on fixed mortgages with the intention of reactivate the business and put an end to the collapse of activity. Once interest rates have reached their ceiling, barring surprises, entities have begun to place loans at unchanged rates at the center of their strategy, with price reductions.

For just over a year and a half, when the BCE began the abrupt rise in interest rates to control inflation, the banks put aside their offensive on fixed mortgages and They put credits linked to the Euribor at the forefront of the battle. With this, they better defended themselves against the upward trend of the new monetary scenario. But, once the peak of this cycle has been reached and with expectations of declines starting in the third quarter of 2024, the sector can make its calculations better and be more aggressive so as not to lose money and attract business at more competitive costs to revive sales, having minimum guarantees forever, as financial sources explain to THE OBJECTIVE.

In fact, Some banks are already marketing fixed mortgages well below the Euribor as long as clients contract other products.waiting for the official rates within a year to be below their current promotions to avoid holes in their accounts and give a boost to the business, which has suffered intensely since the end of 2022. The latest data indicate that the firm Housing loans have plummeted 18.8% year-on-year in July due to their rising prices.

Santander, Openbank, BBVA and Bankinter

Santander, which has recently reduced the price, offers, for example, a mortgage at 3.39% for life of 30 years, compared to the 4.2% quoted by the Euribor. And its digital subsidiary Openbank, a similar 3.6% over 20 years. He Sabadell It has also made a move in this field and has also lowered its fixed rate, although in its case the interest is still slightly above the European indicator, placing it at 4.35%, including all types of costs and commissions.

Mortgages can be found in the market below the Euribor in both BBVA, Bankinter, Evo y Cajamar. And, according to sector sources, in the coming weeks there will be more entities that will be included in this group, while those that are already there will make reductions in the required rates. There is room for this, they explain, since experts suggest that the indicator could be below 3% within twelve or fifteen months.

The home loan segment is one of the driving forces for banking, so The falls in activity and the wave of early repayments on loans subscribed in the past are taking their toll, although the entities are compensating for this collapse in the outstanding balance with an increase in margins due to the vertical increase in the fees they charge due to the increase in interest. It must be taken into account that seven out of ten mortgages are referenced to the Euribor.

Since the ECB raised rates, the banks had encouraged variable mortgages, with offers that have reached up to 0.5% over the Euribor, and mixed mortgages, those that have a part linked to the indicator and another fixed, given the uncertainty. on monetary policy. This has led to new permanent hiring has fallen substantially, from almost two thirds of the total to 45%.

Now, once the outlook is clear and with the prospect of a drop in the official price of money on the not-too-distant horizon, the entities are trying to make the fixed rates throughout the life of the loans the most commercialized, with the hook of some best interests.

Bankers consider that the mortgage business, whose balance is below half a trillion euros for the first since 2006, could begin to rebound at the end of this year and recover strongly in 2024once political instability culminates in our country and the ECB confirms its intentions to reduce official rates to revive the economy.