The increase in the Euribor caused a change in the bank’s mortgage strategy in the middle of the year, which began to make fixed-rate real estate loans more expensive to make variable-rate ones more attractive, with the aim of making them profitable in the face of rising rates. However, despite the change in trend and the reduction in spreads over Euribor, five banks already market variable mortgages that are more expensive than fixed ones if the APR is observed (Annual Equivalent Rate) that includes the final payment made by the client for interest, commissions and other expenses as linked products.
Specifically and taking into account the current offer that they maintain entities in their mortgagesBBVA, ING, Ibercaja, Openbank and Evo Banco offer an APR on their variable rate mortgages above that offered on fixed rate ones.
Mortgage experts consulted by elEconomista.es They explain that, in addition to the commissions that banks charge on mortgages that are reflected in the APR, the main cause that they rise so much is due to insurance. As they point out, the entities have initiated a aggressive war for the linked business (bind the customer for a greater number of products in addition to the mortgage) and especially insurance (such as life and home) which, within this type of loan are sold on occasions almost twice as much as if the user hired them outside.
The Association of Financial Users (Asufin) presented a report this summer in which it concluded that 47% of all life and risk insurance premiums collected by Spanish insurance are made through the financed single premium insurance placed by banks in the mortgages. “The price of these insurances is between 60% and 300% more expensive than if we find it in the free market”, pointed out the association in this regard.
On the other, despite the fact that the rest of the entities do not exceed the fixed APR in their variable APR, they have also increased it considerably, bringing it closer to the environments of 4% and 5%. The case of Abanca stands out, which exceeds 5% APR in its two variable mortgages, the normal one and the one that caps the Euribor at 3.5%, placing them at a level that only fixed mortgages were expected to reach at the end of this year. year due to the increase in the price of the offer to refer the client to the variables.
Experts such as those of the Negotiating Agency warned that the interest on fixed real estate loans would touch 5% at the end of this year, ceasing to be attractive due to their increase in cost. At the moment, in the current offer, only Abanca’s fixed credit exceeds 5% APR, although other banks such as Santander and CaixaBank bring it closer to that threshold with APR of 4.49% and 4.26%, respectively.
However, financial sources point out that the offer shown by banks in their windows is maximum and that, usually, in negotiations with clients, they usually end up selling lower interests than those shown. Likewise, these same sources indicate that there are cases of banks that already show in their offer that if the client contracts the mortgage alone, that is, without linked products such as insurance, it is cheaper than if they add this type of product. This is the case of Abanca, which in its Mari Carmen variable mortgage the APR with the maximum bonus (reduced by linked products such as payroll or insurance) is of 5.01% and without bonus is 4.86%.
The price of mortgages will continue to rise accompanying the rise in interest rates and, with it, that of the Euribor. The main indicator of the price of real estate loans currently stands at 2.854%, which means that it has risen more than 3.3 percentage points since the beginning of the year. The ECB also plans to continue raising rates (it has already raised them by 200 basis points since June) until it achieves its medium-term objective of placing inflation in the euro zone at around 2%, when currently is at 10%. The central bank’s forecast is that there will already be a reduction in inflation in the middle of 2023, although it will still remain high, in the environment of between 6% and 7%. However, financial sources consider that the Euribor has already discounted most of the increases and will stabilize at 3%.