If your intention in the coming months is to buy a real estate, it is convenient for you to read this article. Because the Euribor is a European benchmark index to which many of these operations are linked. In operations to variable rate which is the majority by Spanish users. In this sense, 60,6% of home mortgages it is constituted at a variable rate and 39,4% at a fixed rate, according to data provided by the National Institute of Statistics (INE). Where fixed rate mortgages experience an increase of 30,7 in annual rate with respect to the previous measurement.
On the other hand, and according to these same sources, more than 90% of mortgage loans are referenced to Euribor in recent years, according to reports that have been made from the National Institute of Statistics. This is a factor that completely defines the relevance that this benchmark of the old continent is taking. Above others that are clearly a minority among the preferences of national users. Practically the majority of variable rate contracts have been formalized with this important index.
One of the reasons for this success among mortgage applicants is due to the special and exceptional good time that the financial markets are going through. Since for the first time in many decades, the Euribor is in negative territory. This in practice means that you will have to pay a lot of money in your monthly installments for taking out a mortgage loan. With a saving of many thousands of euros with respect to other scenarios in the real estate market and of course with respect to mortgages subscribed to fixed income, although these always have the same position every year. Whatever happens in the financial markets from now on.
Euribor, how to pay the mortgages?
One of the most relevant aspects of the Euribor in mortgages is how it affects the money you have to face for the acquisition of that apartment that you liked so much. Well, the banks apply a spread over this benchmark index. And that in the current international context is of course very favorable for your interests as a bank user. In this sense, you should not forget that at this time it is very favorable for your personal interests to have a mortgage loan linked to this benchmark. Because right now you will pay less money than a few years ago.
On the other hand, a good part of the mortgages marketed by banks are under this condition in their contracting. It is therefore rare that you find other benchmarks other than the Euribor. To the point that do not represent more than 8% of new contracts and in most cases under conditions in its formalization that are much more disadvantageous for you. Among other reasons because you will have no choice but to assume higher expenses from the beginning. Beyond other technical considerations that have to do with the structure of this important banking product.
Euribor at historic lows
In any case, there is one thing that you have to be very clear from now on and that is which index goes through its best days. That is, it is at all-time lows or what is the same at its lowest level in recent years. To the point that its evolution has led it to place itself in negative territory for the first time in its history. Because in effect, the European benchmark index, the Euribor, is currently located at -0,18, after in 2015, for example, it was located at positive levels, at 0,267. With a wide difference between these three years and that has led to the end that you pay less money for the contracting of your mortgage.
Of course, this is a much more advantageous scenario for you to take out a mortgage from now on. Not surprisingly, the spread applied by many banks has been reduced to levels unthinkable until a few years ago. This in practice means that you can detect spreads today. even below 1%. But it is not the only advantage that you can get from subscribing to one of these banking products. Since a good part of the mortgage loans put up for sale are made without commissions or other expenses in their management or maintenance. As a consequence of the evolution of this reference index in the old continent.
A situation that won't last forever
On the contrary, you must bear in mind that although it is a very good time to mortgage yourself, this scenario will not be far from eternal. If not, on the contrary, you can turn around at any time and it will start to rise and with which your monthly payments will rise. Precisely at the moment when the European Central Bank (ECB) decides to raise interest rates. An action that, on the other hand, he plans to carry out over the next year, although not violently, but gradually. This will mean that the Euribor will begin to rise and will affect the expenses you have to face for the granting of the mortgage loan for the purchase of that apartment that you have always liked.
This is a very substantial difference from fixed rate mortgages. Where always you will pay the same monthly fee, whatever happens in the financial markets. With the peace of mind that you will be able to plan your personal or family budget much better in the coming years. Even with the advantage that it will substantially improve the cost of life, depending on everything that may happen to you in the next few years. For example, if you become unemployed, your salary is lowered at your job or you are the victim of an accident as a self-employed worker. This is where the greatest benefits are provided by mortgages linked to a fixed rate above the variables.
Advantages of variable mortgages
In any case, you will have no choice but to weigh all the benefits that a variable rate mortgage can generate for you, due to its special relationship with the European benchmark index. Well, within this general scenario, the contributions are diverse and of a different nature, as you will see from now on. First of all, do not forget that the change in the price of money can represent a lower fees in a low interest economic context. From this point of view, it is a more favorable operation for your interests as a user that you really are.
On the other hand, it is also possible that you are in a position to extend the repayment of the loan up to 35 or 40 years as a maximum term. Something that in the end will be very beneficial as long as the evolution of the Euribor was the same as it has shown so far. However, with all certainty that this possibility is in this way. Not at all because you should not forget that this very special index is listed every day in the financial markets. And therefore its price is not always the same. In some cases for the better, but in others with a clearly negative effect. To the point that it is a factor that you must anticipate when requesting the source of financing for the purchase of a flat or apartment.
They are usually more affordable mortgages
Another aspect that should be the object of your special attention is that referred to the current levels of the Euribor, variable rate mortgages they will have lower interests with respect to those of a fixed nature. To the point that you can save a lot of money through your monthly payments and in any way more than you can imagine from this moment on. On the other hand, it is also influenced by the fact that loans subject to Euribor variations do not have an interest rate risk commission. Something that, on the other hand, usually happens to us in fixed-rate mortgage loans.
If this source of financing so common in user demand is characterized by something, it is because it is mainly marketed by banks. Of course, you will not have the slightest problem to detect a product with these characteristics. Even from different formats, some of them really very innovative due to the great agility that this market presents at the moment.
To the point that you can combine it with a fixed interest mortgage in which they are constituted as intermediate or mixed models. Depending on the profile you present as a bank customer, which is, after all, what is involved in the demand for these kinds of banking products. Although everything will depend on how the price of money evolves from now on. Where everything seems to be under an upward trend and that can disrupt the plans you have to focus on a mortgage loan.