How to save up to 50,000 euros on average by contracting the mortgage before 2023

The expected recovery that the central banks forecast for this year has been slowed down by events such as the war in Ukraine or the growing rise in inflation. Stock market volatility and, above all, the actions of national and supranational banks to mitigate the economic lurches have precipitated great concern and tension related to the economy. However, there are still sectors that weather the storm.

The Spanish real estate market continues to rise –last February there was the best housing sales data in 14 years with a total of 53,623 operations, according to the INE–, while, at the mortgage level, a slight increase in price is expected due to the return to the positivity of the most used reference index in the market, that is, the Euribor.

The movements of the European Central Bank for the recovery of the euro zone have led to the rise of the Euribor from negative values, reaching a provisional average of 0.236% in the month of May. This has generated an increase in the cost of interest on mortgages contracted at a variable rate and an increase in rates for new contracts.

Looking to the future, the projections made by banking entities and fintech they predict a progressive growth of the Euribor and consequently of the interest rates. Bankinter estimates that in December 2022 the Euribor will reach 0.40%, while in 2023 it will be around 0.80%. For its part, Caixabank predicts that for next year it may even reach 1%. The contrast is put by iAhorro, which is more cautious and does not believe that it will continue to grow at the same speed in the coming months, although it also points out that “everything will depend on the decisions that the ECB may take in the future.”

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From 20,000 to 50,000 euros in savings by contracting the mortgage today, instead of in 2023

“One of the most frequent doubts in our users is how the rise in interest rates will affect their mortgages”, says Juan Ferrer, CEO of Hipoothe first 100% online mortgage broker in Spain.

Faced with this situation, Hipoo’s financial and mortgage experts have made a detailed projection of what the increase in interest rates could mean if the forecasts come true and the trend continues to rise in the immediate future. To do this, they have studied three typical prices of the mortgage value based on the TIN.

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The first value that they have taken into account has been the average cost of a mortgage in Spain, which reaches 141,452 euros, according to data from the INE. If a mortgage of these characteristics were contracted now –banks are offering an average of around 1.5% NIR over 30 years–, the interest to be paid would amount to a total of 34,300 euros, while in a supposed scenario of a 2.25% NIR in 2023, the interest on the loan would amount to 53,200 euros. In other words, there would be a saving of 18,900 euros in just one year.

If the value of the contracted mortgage is increased to 200,000 euros and establishing the same parameters as above, with a 1.5% TIN at 30 years in 2022 and signing a 2.25% in 2023, the savings in terms of interest would reach 26,700 euros in total.

Finally, in the case of contracting a mortgage of 400,000 euros, the data show a total savings in the life of the mortgage loan of 53,400 euros in interest.

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“In the face of doubts and uncertainty, we always recommend caution and look at the family economy in the long term, even more so if we analyze the market and current and future circumstances. However, the current situation encourages a detailed study of the financial situation, through which to achieve a certain profit margin, “says Juan Ferrer, CEO of Hipoo.

The savings will depend on the consumer’s decision

With these data on the table, the answer to the question, will it be a quantitative saving to buy a home today, instead of in 2023? The answer is yes. The projections and the scope of these seem to agree with the economic experts who predict a rise in the Euribor, and consequently in the mortgage TIN and, in turn, in interest in general, especially due to the current global trend of trying to reduce rising inflation. .

Therefore, and with the data on the table, it is up to the consumer to speed up the purchase of their home or not, with practically full knowledge of the savings that it will entail in the medium-long term.

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