The rapid, high and constant increases in interest rates approved by the European Central Bank (ECB) in recent months have forced citizens to renegotiate their mortgages with the bank. According to the latest data published this Monday by the Bank of Spain, a record for renegotiation of mortgage loans was recorded in April. A level never recorded by statistics in a month. In fact, the 2,503 million euros renegotiated in April are the highest monthly level for this type of operation since the historical series existed (January 2015). Even more, this figure exceeds the sum of the amount of the loans whose conditions have been readjusted since July of last year when interest rates began to rise (2,236 million euros).
Only the April data is already larger than all the renegotiations that took place in 2022 (1,910 million), 2021 (1,744 million), 2019 (1,318 million), 2018 (1,744 million) and 2017 (2,357 million). However, it is below the renegotiations registered in 2020 (2,605 million), the year of pandemic, in 2016 (6,396 million) and 2015 (9,241 million).
The renegotiations may include modifications in the terms, in the interest rate or change from fixed to variable interest rate. The bulky change in the renegotiations occurs in a context in which the European Central Bank has carried out the fastest rate hike in its history, which has gone from zero or negative before July 2022 to the current 3.75% , with yet another rise expected although ECB President Christine Lagarde recently signaled that it is nearing its ceiling. This has pushed the Euribor to its highest since 2008.
Mortgages signed at a variable rate have become more expensive so far this year by more than 3.8 percentage points, which represents increases of around 300 euros per month in the installment to be paid for an average mortgage, although depending on the amount of the loan and the expiration period may be longer.
Another reason for the high amount of loans renegotiated in April is that it is a particularly dynamic month for mortgage granting, since the first quarter of the year is usually weaker in mortgage granting. Therefore, in April there would be more than meet the annual period where the interest rate is updated.
The total number of mortgages signed in April of this year reached 6,231 million euros, which is the highest level since July 2022, as well as an increase of 16.1% compared to the month of March.
By maturity period, mortgages signed in April with less than one year to maturity were 2,456 million (39% of the total), while maturities between 1 and 10 years accounted for 22%. Negotiated loans for home purchase with a maturity period of more than 10 years stood at 2,386 million euros, 38% of the total.
The new operations signed in the fourth month of the year did not offset the early repayments, so the outstanding balance of the mortgage portfolio of the Spanish entities as a whole was 504,355 million euros, its lowest level since January 2021, which in turn was the lowest level since before the 2008 crisis.
Regarding the price, the weighted average interest rate of the operations signed in April was 3.48%, seven basic points less than in March. This drop is due to the fact that the interest rate for renegotiations fell by 19 basis points, to 3.29%, while the rate for other operations rose by five basis points, to 3.60%.
In this way, the weighted average rate of the outstanding balance of the Spanish mortgage portfolio was 2.86% in April, 1.72 percentage points more than in April 2022.
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