Spanish Banks Reduce Mortgage Rates in Response to Predicted ECB Interest Drop

A man in front of a real estate window. REUTERS/Phil Noble.

Citizens who are looking for a mortgage to finance their home should take advantage of the moment after ten banks have decided to change their commercial strategy and lower their mortgage loans after 18 months of increases.

With this reduction, the banks intend to increase their mortgage credit business in the face of a more than foreseeable drop in interest rates by the European Central Bank (ECB) during this year, and which, as announced by the president of the Eurobank Christine Lagarde, It is “likely” to take place next summer.

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What is not known is how much rates will fall after the Governing Council of the ECB decided to keep them at 4.5% during its last two meetings, in October and December.

In this scenario and with the aim of attracting the greatest possible number of clients, there are already ten banks that in January have decided to lower their mortgage prices, both variable interest rate mortgages, mixed mortgages and fixed mortgages. However, “the fixed rate sector has benefited the most,” with discounts on six mortgages, says Miquel Riera, mortgage expert at HelpMyCash.

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Among them is Bankinter, which was the pioneer entity in undertaking the declines. It reduced the interest on its fixed mortgage from 3.60% to 3.30% and on the fixed rate offer from COINC, one of its online brands, from 3.50% to 3.20%. Unicaja followed suit and lowered its fixed interest mortgage loan from 3.90% to 3.65%.

After the Kings, the first to move was Banco Sabadell, which reduced its fixed mortgage from 3.40% to 2.80%, followed by imagin, CaixaBank’s mobile bank, which lowered its price from 3.70% to 3. 30%, and by MyInvestor which reduced the interest from 3.69% to 3.49%.

Mixed-rate mortgages took the same downward path, but to a lesser extent than fixed-rate mortgages. Two banks that reduced the initial fixed interest that they apply during the first ten years of the term on their mixed mortgages were Bankinter, from 3.30% to 3.20%, and ING, which did so from 3.65% to 3.40. %.

For its part, Banco Sabadell lowered the interest on its mixed mortgage; both the initial fixed and the variable. Before the change, the rate was 2.99% in the first three years and Euribor plus 0.65% for the following years, to now move to an interest rate of 2.75% in the first three years and Euribor plus 0. 60% for the rest.

Mortgages on sale: banks start the year by making loans to purchase a home cheaper.

The variable rate mortgage loans that have decreased this month are, at the moment, three. Two of them were Kutxabank and Banco Sabadell, which reduced the initial fixed rate applied in the first year from 2.82% to 2.58% and from 2.89% to 2.65%; respectively.

MyInvestor has also made a move by reducing the differential of its variable mortgage and increasing the initial fixed rate, moving the interest from Euribor plus 0.89% (1.80% fixed in the first year) to Euribor plus 0.79% (2.49% fixed during the first year).

Despite these improvements, analysts recommend caution when taking out variable rate mortgages, since “they continue to be risky,” warns Olivia Feldman, economist and co-founder of the financial comparator HelpMyCash, because currently “we are close to the maximum of the Euribor and there is the possibility of this index remaining around 3% for a prolonged period.”

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However, variable rate mortgages may continue to fall in the coming months, analysts predict, especially if the Euribor continues to fall after closing December at 3.679% and placing its provisional average in January at 3.592%.

In this context of falls, Estefanía González, personal finance spokesperson for Kelisto, highlights that the best offers that are now on the market are the Bonus Fixed Mortgage from Banco Santander, which charges an interest of 2.8%; the mixed mortgage from Cajamar, with a five-year fixed rate of 2.40% TIN and a variable rate of Euribor + 0.6%, and the Real Madrid Variable Mortgage from Unicaja, with Euribor plus 0.45%. In her opinion, “they are the cheapest mortgages in January.”

As for what type of mortgage should be taken out in the current market scenario, experts recommend mixed interest rate ones. “They are the most interesting,” advises Laura Martínez, spokesperson for iAhorro, since, although “banks can grant mortgages at a fixed interest rate below 3%, they only offer them to clients with very good profiles.”

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Nor are variable rate ones a good option now, in his opinion, in fact, he considers that “right now they are the least recommended and there are no banks that are offering them effectively either.”

For his part, Miquel Riera warns that before opting for one, the future homeowner should analyze their risk tolerance: “If you prefer your payments to be stable, the fixed rate may be more convenient. If you want to pay fixed and somewhat more affordable installments during the first years, a mixed rate is a good option and if you want to take more risks because you believe that the evolution of the Euribor will benefit you, variable interest is a good alternative, as long as you can assume quota increases in case you make a mistake.”

2024-01-18 04:04:17
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