Interest rates to record lows and Euribor minus 12 months have revolutionized the mortgage in Spain. So far, most of the mortgaged opted for variable rate mortgages, but since the fourth quarter of last year have increased buyers who are inclined to the fixed rate. According to the Association of Registrars of Property, hiring fixed-rate mortgages reached a record high in the last quarter of 2015 with 8.81 percent of new loans signed, representing an increase of 4.8 points the same period in 2014. in addition, there have been peaks hiring more than 13 percent in communities such as Murcia and the Balearic Islands.
However, it is still a small percentage of the total contract and it would be "almost impossible" that fixed rate mortgages are hired at the same rate as variable rate because the most competitive bids are for short periods and most consumers need long lead times to assume the loan, says Estefania Gonzalez, personal finance manager Kelisto.es content.
The new commitment to fixed rate mortgages is due to "historic cuts' they are having. "Now a mortgage fixed rate is one of the best choices because their interests are lower than ever in Spain. You can hire fixed-rate mortgages below 2 percent and a year ago could not find any below 5 percent. In Spain a mortgage at a fixed rate to 2 percent has never seen, "says Julian Garcia, expert Mortgages HelpMyCash.
HOW TO CHOOSE A MORTGAGE?
Before signing a mortgage the mortgaged future must analyze what best fits your risk profile, whether fixed, mixed or variable rate. "If you do not want or risk or frights, the ideal is to choose a fixed rate. The drawback is that at the beginning of the loan will pay interest above the market in exchange for peace of mind, "says Felipe Lopez-Galvez, analyst Self Bank.
He notes that while rates remain low in the coming years "no one can rule out" that within 10 years back to see a Euribor above 5 percent, so a fixed rate mortgage is for him the "most responsible choice, and you know in advance how much money you spend monthly to this item. Mortgages are usually granted for very long term, so a fixed rate to 3 or 4 percent may sound flippant today, but it's a smart move for the future if rates tend to appreciate. "
Every mortgage has advantages and disadvantages that a home buyer has to know (see table). The main advantages of fixed rate are protecting the mortgaging of the vagaries of the Euribor, its price has dropped, no clause floor and may become cheaper than variable rate, depending on what are the expectations of evolution Euribor and the chosen term.
As for the disadvantages, it is noteworthy that their commissions are usually higher than variable rate and its offer is more limited.
However, with the Euribor negative, banks are betting on fixed rate mortgages and in recent months have launched new products that, for the moment, achieve higher than variable rate mortgages margin.
This is the case of Ibercaja has launched fixed rate mortgage 'Tranquility', with an interest rate from 2 percent. According to bank sources "it provides reassurance of knowing, at the time of hiring, the maximum contribution you can expect to pay."
In addition to the risk profile, other aspects to be considered by the buyer to choose a mortgage is income you have, the expectations to increase their income and the estimated time it will repay the loan.
According to Juan Villén, responsible for Idealistic Mortgages, if a person can pay the mortgage in 10 years and believes they will increase their income, is more interested in variable rate, because "if we now have interest rates to zero or negative benefits from low interest rates that gives you the variable rate and how quickly will be less amortize years paying a higher rate if interest rates rise. "
If the mortgaging future income also has high variable rate mortgage is the best option because if the Euribor rises and triggers the quota can cope.
In the opposite case people with average or low wages, with no prospect of revenues to increase and applying for a mortgage to 25 years or more are located. "In that case we recommend a fixed rate mortgage because they are now very cheap. There are fixed mortgages to 30 years to less than 2.5 percent interest. In this case the buyer is protected from rate increases because it is logical that the long-term Euribor rises again to average levels. Although initially mortgage pay more interest over the life of the loan fixed rate mortgage is cheaper, "says Villén.
Recommends mixed type when the mortgaged know that in 10 or 15 years is going to sell the house acquired and long-term needs that the quota is low. "At least one good mixed has to be fixed 10 years on, because three years fixed in the current rate environment would give the money to the bank." In his view, in general, the best mortgages are now fixed or mixed more than 15 years in the fixed part.
Julian Garcia is of the same opinion, "it depends on the personal situation of each and risk aversion, but now the fixed rate is the ideal choice because its interest is very low and although, at first, the fee is higher the variable rate, long-term leaves more profitable. "
ADVANTAGES AND DISADVANTAGES OF FIXED RATE MORTGAGES, MIXED AND VARIABLE
A FIXED RATE
Advantages:
Protect the mortgaging of changes in Euribor.
Its price has been reduced in recent months.
No ground clause.
They can be cheaper than variable rate.
disadvantages
higher commissions.
They may have an extra charge for interest rate risk.
We must have more money saved.
The repayment period may be shorter.
Its offer is more limited.
A VARIABLE TYPE
Advantages
Some allow you to borrow up to 100 percent of the appraised value.
Higher amortization period.
The commissions are lower.
disadvantages
The customer must make their own simulations to see how evolve its share if the Euribor reaches maximum.
With the Euribor at least some banks may include clauses that limit the total interest to be paid is less than zero.
A MIXED TYPE
Advantages
Its flexibility: if the future mortgaged believes that the types can climb down the short term and medium term could be interesting.
disadvantages
Your bid is far more limited than those of fixed or variable rate.
A MORTGAGE FOR EACH PROFILE
A VARIABLE TYPE:
– Buyer will pay the mortgage in about 10 years.
– Considers that will increase revenue in the medium term.
– With higher incomes.
Fixed rate:
With average wage-buyer or low.
– No prospects for increasing their income.
– Mortgages to 25 years or more.
– Buyer risk aversion.
A MIXED TYPE:
– Buyer medium-term plans to change housing.
– With prospects for increasing their earnings in the medium term.
THE EXPERT'S OPINION
Estefania Gonzalez, Kelisto.es
"In Spain it would be almost impossible for fixed rate mortgages are hired at the same rate as variable rate '
Julian Garcia, HelpMyCash
"Now a fixed rate mortgage is one of the best choices because their interests are lower than ever in Spain, hovering around 2 percent '
Felipe Lopez-Galvez, Self Bank
"If a buyer does not want to risk or frights the ideal is to choose a fixed rate mortgage, although at first have to pay interest above the market