Euribor skyrocketed: do cheap mortgages still exist?

The mortgage market has been taking a definitive turn for months. Gone are the years of ultra-cheap financing. The latest rate hike by the European Central Bank (ECB) brings rates to 3%. And the Euribor moves somewhat above, already at 3.337%. Despite the change in depth, the market continues to offer opportunities, although they smile at the best profiles.

After a period of continuous adaptation due to the takeoff of the Euribor, the general review of conditions for new loans has slowed down. “What was happening was not normal. The usual thing is that the entities review the offers of their mortgages once or twice a quarter, not almost every week as was the case ”, points out Simone Colombelli, director of mortgages at iAhorro.

First consequence: the era of fixed mortgages in the offers of the entities, with loans that moved at 1%, has ended. Now, “situated at 5%-6% APR, it will make them stop being attractive to consumers,” says José Manuel Fernández, deputy director general of Unión de Créditos Inmobiliarios (UCI). The variables are around 4.3% at current levels (for a standard 0.99% Euribor). “The rise in interest rates and the Euribor have caused a general rise in all types of loans,” he comments.

With this panorama, on whether there are cheap mortgages left, the answer is a yes… partial. They remain for good profiles. For example, the Trioteca platform offers a fixed 2.7% mortgage without a link. The requirements to access are standard: ask for less than 80% of the value of the home, that the payment of installments does not exceed 35% of income and with job stability (more than two years).

In iAhorro they comment that it can even be lowered to 2.35%. Again with buts. It is linked and is offered to specific clients: couples who together earn more than 3,500 euros, with permanent contracts, savings for the purchase and who request less than 80% financing. “Officials and workers in sectors with little unemployment such as IT can opt for these products,” says Colombelli. It also comes with a link to payroll, cards and life and health insurance, so you have to do the numbers to see if that extra expense is appropriate or not.

For ordinary mortals, whether what you get is a cheap mortgage depends on how you look at it. There are no longer 1% fixed rates, but we must also remember that a few years ago the Euribor exceeded 5%. “Regarding 2008, mortgages today are cheap. Compared to a year ago, with the Euribor in negative, very expensive. Although it is because we have gotten used to the negative price, an anomaly”, explains Ricard Garriga, CEO of Trioteca. In any case, from the HelpMyCash comparator they warn that “the most competitive offers will disappear as the months go by.” Miquel Riera, the portal’s mortgage expert, argues that “with rate increases, entities will make their fixed mortgages more expensive to maintain margins and encourage variable contracting,” he adds.

Not everything is A or B. Mixed mortgages are gaining ground in the offer of entities. “The variables are not recommended because we do not know what will happen with the Euribor. The mixed ones have turned into the product with better offer in the last months”, ventures Colombelli. His scheme goes through the first few years at a fixed rate -five or ten, for example- and the rest of the loan at a variable rate. The advantage they give today is that in the fixed tranche, the first years, better rates are achieved (2.2% -2.3%, they point out in Trioteca) than a total fixed mortgage. That allows you to cover yourself from the rises in Euribor. “In the short term it is interesting, you always pay the same even if interest rates rise,” says Garriga.

When the variable tranche is reached, which currently triggers the installments if it is due for review, the mortgage can be subrogated – that is, take it to another bank – if there are better offers. At the moment it will have to be evaluated. “If someone with a standard variable goes to a fixed 2.7%, they will save 200 euros a month,” he states for a general scenario.

The ECB anticipates more rate hikes in March. “The Euribor will continue to rise, but in a more contained and stable way, not at the speed of 2022,” they comment in iAhorro. “Most of the entities adapted their commercial policies in the last quarter, the bulk of the upward movements have already been made and from now on we will see less variation in rates,” Fernández seconded.