The banking scenario regarding mortgages is changing due to new economic policies promoted by the European Central Bank (ECB). The direct impact on the EURIBOR, reference for variable rate mortgages -which monopolised nearly all mortgages in Spain until recently-, has caused a dramatic rise in interest rates.
In this sense, the fleeting upturn of this indicator has strengthened the interest in the certainty offered by fixed rate mortgages, as well as variable rates becoming attractive to banks yet again since they grant larger margins. The Bank of Spain’s data shows a clear scenario of more expensive financing in this country: mortgage credits have openly become more expensive during this year, from 1.44% on average for new mortgages during January to 2.03% during August.
What does this mean for Spanish families who pay mortgages on a monthly basis? At this point in time, looking for a fixed rate mortgage means accepting an interest rate of around 3% at the very least. Few entities offer fixed rates under this threshold, with the exception of Evo Banco at 2.53% for 25 years or BBVA at 2.81% for 15 years when contracting online. Contracting online affords the best offers, while traditional banking grants interest rates nearer 4% as with Bankinter’s 3.54% APR for 20 years and Santander’s 4.19% APR on their discounted mortgages.
In turn, EURIBOR’s surge over the past months regarding variable rate mortgages -a rate which was at -0.48% last 2021 is now at nearly 2% during 2022- is making its presence felt. This increment means an average monthly rise in price between €124 and €288 for those mortgages that need reviewing. A noteworthy rise for many families taking into account the overall figure could exceed €3,400 on an annual basis.