If there is a financial product that is especially important among users, it is none other than the mortgage. It is a line of You will have to go through if you want to buy a home without saving. But for the same reasons you will entail a series of expenses for many years, perhaps excessive. Both in terms of its return and the interests and commissions generated by its demand. To the point that the final cost will be very high, and where you run the risk of not being able to face this payment due to problems in the income that you have every month to take on the contracting of some of the mortgages that financial institutions sell.
From this general scenario, the latest data from the National Statistics Institute (INE) are very clear in the sense of a recovery in its demand by users. Because in effect, it becomes clear that the average amount of the mortgages registered in the property registers in November (from public deeds carried out previously) is 145.769 euros, which means 15,1% higher than the same period last year. In an upward trend in recent months, as a result of the economic recovery in our country. And that therefore has also been transferred to the mortgage sector.
On the other hand, the latest official data also shows that the number of mortgages constituted on homes is 24.882, 3,7% less than in 2016. The average amount is 122.703 euros, with an annual increase of 10,7%. Regarding the value of mortgages constituted on urban properties, it reached 4.844,0 million euros, 14,8% more than in the previous year. In homes, the Borrowed capital stands at 3.053,1 million, with an annual increase of 6,7%.
Mortgage interest
For mortgages constituted on the total of properties, the average interest rate at the beginning is 2,77% (8,0% lower than in 2016) and the average term of 22 years. On the other hand, 65,9% of mortgages are at a variable interest rate and 34,1% at a fixed rate. The kind of average interest at the beginning it is 2,44% for variable rate mortgages (17,1% lower than in 2016) and 3,63% for fixed rate mortgages (12,7% higher).
With regard to mortgages on homes, the average interest rate is 2,71% (14,3% lower than in November 2016) and the average term is 24 years. 63,5% of home mortgages are at a variable rate and 36,5% at a fixed rate. Fixed-rate mortgages experienced a 6,5% decline in annual rate. The average interest rate at the beginning is 2,54% for variable rate home mortgages (with a decrease of 19,4%) and 3,10% for fixed rate mortgages (3,2% lower) .
How do interest rates influence?
Another aspect that you should assess from now on is how a rise in interest rates can influence you. Well, in this sense everything will depend on whether you have hired variable or fixed rate. If it is the latter, you will not have to fear any increase in the monthly fee because it will not be affected by this movement. You will always have to pay the same, whatever happens in the financial markets. Not surprisingly, this is one of the main advantages of fixed-rate mortgages. That you will always know what is the amount that you will have to pay for its formalization.
Another very different case is that of variable rate mortgages, which are very sensitive to changes in trends. That is, to possible increases in interest rates. Because an increase of one percentage point in the European benchmark, the Euribor, can mean an increase in the cost of financing of up to double what you paid previously. As the increases are greater, the expense on your mortgage will increase. In proportion to its intensity.
What is the most suitable type?
In these it is normal which type of mortgage is better to hire to defend your interests. Whether at a variable rate or, on the contrary, fixed. Well, for now, the first one is even more profitable. The main reason is because the benchmark index to which it is linked, the Euribor, is at the lowest level in the entire historical series. Because in effect, it is in a negative situation, specifically in 0,163%. In this way, it allows you to save a lot of money compared to other exercises. Because above all you will have a more affordable monthly fee to optimally plan your annual budget.
As a consequence of the situation in the financial markets, it is not surprising that financial institutions have launched their best offers on the mortgages they are currently selling. Even in some of them, with spreads below 1%. A way for the acquisition of your next home to be carried out with a greater adjustment in expenses. Because they are also usually exempt from commissions and other expenses in their management or maintenance. As the main contributions of mortgage loans at the current time.
Risks in your hiring
Anyway, you must analyze that this situation won't last forever, far from it. Because you must foresee that at some point or other interest rates will rise and it is a risk that you have to assume in this class of financial products. Not surprisingly, the community monetary authorities have already advanced that this scenario will occur at the end of this year or perhaps in the worst case during 2019. In any case, do not doubt that this moment will come. With what
If this is the scenario for the next few years, do not doubt that the monthly payment of your mortgage will become more expensive until the levels reached by the rise in interest rates. It will no longer be as before and you will have to dedicate a greater monetary effort to maintain the mortgage credit for the purchase of your apartment. The main effect of this scenario is that the final cost for contracting this financial product will be much higher than initially expected. It will, therefore, be a notable disadvantage with respect to mortgages based on a fixed rate. Do not forget it from now on if you are going to subscribe it in the next few days.
Fixed rate mortgage contributions
This modality of mortgages, on the contrary, allows you not to have any kind of surprises during the duration of the contract. Because it will remain unchanged in its clauses, whatever happens in the financial markets. In this way, you will be much calmer before the possibility that they can increase the monthly fee of your mortgage. However, if you hire it when the increases have already occurred, there is no doubt that it will also affect the interest rate that the credit institutions will apply to you. In proportion to the intensity of the hikes.
On the other hand, signing a fixed-rate mortgage can help you avoid disproportionate increases in your payments every month. They are intended for a very well defined user profile that look for safety above other more aggressive approaches. In this sense, it may be the correct solution to the foreseeable rate hike that is announced by the community monetary bodies. To the point that you can save many euros in its formalization. Because you will not have negative surprises at any time during the duration of the mortgage.
Change in mortgage trend
In any case, the latest data from the National Institute of Statistics show an important transfer of mortgages variable rate to fixed rate. A trend that, on the other hand, had not been generated in recent years. And in any case, they warn users of the fear of the next arrival of the rise in interest rates. Not surprisingly, it is one of the strategies they have at this time to protect themselves from this scenario in the financial markets. Beyond the interest presented by this financial product.
Of course, it is something that you can apply in your contract at the time of acquiring that apartment or home that you liked so much. In some percentages that will increase over the next few years and as the dates on which these movements will begin, which are noticed from the monetary organs of the European Union, approach. But in the worst case, they will occur from next year 2019. A period that will be decisive to change the course of this benchmark index.
Since its negative price as it happens at the moment after many months in the same situation. Something that is about to end and from which users who currently have their mortgage loan at a fixed rate can benefit. Because there will be many euros euros that you save with this strategy.