Something is changing in the national mortgage landscape in recent months, which are dominated by the entry into force of the new mortgage law and the slowdown in the economy. In this general environment, it is normal for many bank users to wonder whether it is worth borrowing to take out a mortgage right now. In order to buy a home that can serve as a investment formula given the doubts raised by the fixed and variable income markets in this year that we have just started.
Because in its favor it has that the price of money continues at historical lows at be at 0% in the euro zone. That is to say, without any value and therefore it favors that the interests of the loans are now much more competitive than a few years ago. Where you can save a few euros a month in the operation signed with the financial institution. From this point of view if this banking movement is beneficial and it can be said that it is worth borrowing to subscribe a mortgage loan.
In any case, a change in contracting habits is being observed since there is a trend towards contracting mortgages linked to fixed income above fixed income. This is because there are many doubts about what can happen from now on. In the belief that interest rates may rise in the coming years and that it is after all the motivation for this transfer in the demand for mortgages for the purchase of a flat. It is not thought that the situation will continue as in these very relaxed years for the contracting of a loan of these characteristics.
Mortgages: Euribor remain at a minimum
One of the sources of reference to make this decision resides in the fact of what the European reference index may be doing for the contracting of mortgages. And in this sense, the data supported by the National Institute of Statistics do not offer doubts to the applicants of this financial product: the Euribor is the rate to which the highest percentage of variable rate mortgages refers. But despite everything a slight tiredness in its evolution especially with respect to previous years. Where it can be said that it monopolized the mortgage market with all clarity.
In this general scenario, it should be noted that this index for contracting mortgages for the purchase of good real estate will continue for another year in negative ground. Although something very different is what may happen in a couple of years and that is what is causing fixed-rate mortgages to be returning to the interest of a large part of bank users. It should be emphasized that the opinion of the experts foresees that there will not be major transcendental changes in the monetary policy of the ECB. So that in this way, the main benchmark for mortgages does not return to above zero
At all-time lows
It cannot be forgotten that in the middle of the year the Euribor plummeted to its all-time low and later, in recent months, resume its upward course, albeit in a very contained way. To finally close this year that is gone at -0,263. With these levels if the signing of this operation can be made very profitable since we will be saving a lot of money in the monthly payment of this kind of debt. To the point of saying that it is worth borrowing to subscribe a mortgage right now. But only in these moments, something else different is what may happen in the next few years.
Regarding its forecasts, it must be pointed out that the Euribor in 2020 will be around -0,22 and, in 2021, which would lead to a lower cost of variable rate mortgages that are reviewed in the first half of the year. This would be another positive fact to make this decision in these first days of the year and would be a guarantee for this kind of indebtedness to occur and invest in the brick for the next few years. With a trend that at the moment has not undergone any significant changes and that induces this series of measures to be taken when contracting a mortgage loan.
Interest rate on mortgages
The offer that credit institutions have been developing provides cheaper mortgages, with a differential between 1% and 2%. But the most beneficial thing for the applicants of this product is that it is marketed without commissions or other expenses in its management and maintenance. In other words, they are cheaper in the short term and this is very positive news for applicants. In any case, it is already more difficult to get a loan for the purchase of a house with a differential below 1%, as it was two or three years ago.
Another of the most outstanding aspects generated by the mortgage market has been slowing down in recent months as a result of the negative signs of the international economy. Where it is foreseeable that this trend will be accentuated in the coming months and especially from the year 2021. Where a change of opinion is expected in the monetary policy of the European Central Bank (ECB), with an increase in the price of money . For this reason. It is not surprising that the growth of the mortgage firm this year that has left us has been a meager 0,1%. In other words, the purchase of a mortgage can be profitable right now and in the short term, but not in the medium and long term and for that reason a stop in its demand is seen in the latest official data.
While on the other hand, we cannot forget the doubts that investments in financial markets do not bring. Because fixed income is not very profitable at the moment with intermediation margins that barely reach 1%, while equity products offer many doubts due to the volatility in these financial markets. To the point of having the fear that they may lose part of their invested capital to what may happen with these financial assets.
The number of mortgages falls 2,1%
The number of mortgages constituted on homes is 29.691, 2,1% less than in October 2018, according to the latest data provided by the National Institute of Statistics (INE). Where it is shown that the average amount is 129.237 euros, with an increase of 1,1%. The average amount of the mortgages on the total of properties registered in the property registers in October (from public deeds carried out previously) is 147.338 euros, 4,2% higher than in the same month of 2018. On the other hand, the value of Mortgages constituted on urban properties reached 5.671,1 million euros, 0,9% less than in October 2018. In housing, the capital loaned stood at 3.837,2 million, with an annual decrease of 1,1% .
The data provided by the National Institute of Statistics (INE) also confirms that for mortgages constituted on all properties in October, the average interest rate at the beginning is 2,42% (6,0% lower than in October 2018) and the average term of 23 years. 57,1% of the mortgages are at a variable interest rate and 42,9% at a fixed rate. Where the average interest rate at the beginning is 2,09% for variable rate mortgages (11,2% lower than in October 2018) and 3,02% for fixed rate mortgages (1,4 % lower). For home mortgages, the average interest rate is 2,50% (5,0% lower than in October 2018) and the average term is 24 years.
Variable interest decreases to 79,2%
54,7% of home mortgages are at a variable rate and 45,3% at a fixed rate. The average interest rate at the beginning is 2,17% for home mortgages variable rate (with a decrease of 10,2%) and 3,02% for the fixed rate (0,1% higher). While finally, the INE data show that of the 4.584 mortgages with changes in their conditions, 35,0% are due to changes in interest rates. After the change in conditions, the percentage of fixed interest mortgages increased from 13,0% to 19,7%, while that of variable interest mortgages decreased from 86,3% to 79,2%. The Euribor is the rate to which the highest percentage of variable rate mortgages refers, both before the change (77,1%) and after (76,2%).
The offer that credit institutions have been developing provides cheaper mortgages, with a differential between 1% and 2%. But the most beneficial thing for the applicants of this product is that it is marketed without commissions or other expenses in its management and maintenance. In other words, they are cheaper in the short term and this is very positive news for applicants.