35% of the mortgages in force in our country underwent changes during the year 2022, eight points above the data registered in 2021 (27%). Only in Ireland (44%) and Slovenia (42%) were more novations or subrogationsaccording to data published by the European Central Bank (ECB) and the European Mortgage Federation (EMF), and collected by the comparator and mortgage adviser iSavings.
Of the changes made by the Spanish mortgagees, 19% of the total were made through novation and the remaining 16% through subrogation. However, according to the director of Mortgages of the comparator and mortgage adviser iAhorro, Simone Colombelli“this percentage would be much higher if the cancellations that also have the purpose of modifying the conditions of the mortgage were counted”.
To better understand the magnitude of the matter, you must first understand what a novation, a subrogation and a mortgage cancellation are. “The novation of the mortgage is the change of the conditions of the loan after reaching an agreement with the same bank where you have contracted it. With subrogation, for its part, this change in conditions can also be made, but transferring the loan to another bank”, they explain from the mortgage comparator.
However, about the cancellation They ensure that “through this route what is done is, as its name indicates, cancel the mortgage to open a new one with better conditions in another entity” and “if the process is carried out in this way, in the records, the operation it is recorded as a new mortgage and not as a mortgage modification”.
Why aren’t cancellations being recorded as changes?
According to Simone Colombelli, “Most of the people who want to change the conditions of their mortgage to improve them request, first, a subrogation.n, but the entities prefer cancellations, that is, cancel the existing mortgage and open a new one with other conditions”. This expert adds that one of the reasons is that “Mortgage cancellation is a more expensive procedure for the usersince they have to start the entire procedure from scratch, but the bank also earns more”.
In the event that they were accounted for, the iAhorro spokesman assures that the percentage registered by the European Central Bank and the European Mortgage Federation on the changes registered in mortgages “would be much higher.” So much so that, according to Colombelli, “for a few months, more than 40% of users who come to iAhorro are looking for change the terms of your mortgage to pay less for it”.
Germany or Austria, at the tail of the changes in Europe
If we compare the data for Spain with the rest of Europe, we see that only in Slovenia e Ireland the total percentage of changes in outstanding mortgages is higher. In the first case it rises to 41% (33% novations and 8% subrogations) and the second shoots up to 44% (39% novations and 5% subrogations). at the tail are Germany (15%), Cyprus (15%) o Austria (13%), where “the mortgage has much less weight than the rent due to the difficulties of granting the mortgage itself,” adds Colombelli.
In Germanywhen signing a mortgage, the debtor also signs an extrajudicial contract in which he agrees to pay the mortgage with the conditions initially signed, so it is very difficult for him to change them throughout the loan: the only thing he could do in this case it is a cancellation to open a new mortgage, you cannot make novations or subrogations.
For his part, in United Kingdom there is the ‘all moneys’ clause thanks to which the mortgage also ensures future debts to the same creditor. In practice, this means that the mortgage is used in a very generic way for other financing, beyond the purchase of a home, and that the change is not so common.
And, in addition to those mentioned, “many countries within Europe where the figure of surrogacy as such does not exist, so this type of operation cannot be carried out”, admits the director of iAhorro Mortgages.
In Spain, saving is the key to change
The modification of the mortgages has gone to more at the moment in which the euribor began his climb, back in April 2022, at which time the reference index for variable mortgages returned to positive values after spending more than six years in negative. This argument is reflected in the data collected by iAhorro: in March 2022, only 15.30% of the signatures made by users of the comparator and mortgage adviser were aimed at improving the conditions of their mortgage, data that doubled in August of that same year (30.32%) and which reached its maximum in January 2023, with 48.14%.
However, to interpret these data it is necessary to understand that “about three months pass from the beginning of the mortgage search process until it is signed”, explains Simone Colombelli, so, if we talk about the request for changes, the real turning point would not be in August, but in May.
