The average rates on mortgages have spent months easing the burden on home purchases. This picture does not seem to change, but the preferences of new hypothecated will through the Euribor.
Experts insist that this is the best time for signing mortgage contracts or to improve the conditions of those already signed.
Euribor closes September with an average rate of -0.057%. Chaining its eighth consecutive month in negative, and saving about 150 euros per year on an average mortgage (125,000 euros to 25 years with a differential of 1.5%).
Facing last year’s rate (0.154% in September 2015), this index is the lowest in all the Spanish historical series and exceeds the previous ground of July 2016.
Ahead, we still have almost two years of decline, new trends in mortgage contracts and facilities to the early repayment.
Elements that facilitate financial aspects of homebuying.
Euribor continues downwards
Mortgages come to set a new negative record, but this decline has some trail left. Financial experts point out that until late 2018 or even early 2019, there won’t be a change in this tendency.
This rise will be gradual and slow, reaching an average rate of + 0.50% in 2021.
The slight rebound during last August (-0.048%) has only served to confirm a new fall in September (-0.057%).
Numbers such as the three-months (-0.301%) allow to see the evolution of the Euribor in perspective.
Meanwhile, in regard to stick with low rates, the answer is in London rather than in Brussels. Consequence of the official date of Brexit, set for March 2017.
In those circumstances, hardly anything will change in the next two years.
Fixed mortgages are gaining ground
While variable rate mortgages remain as favorites for Spanishs, with 75.6% of signed in July, fixed rate mortgages have been gaining ground to reach 24.4%.
This is an evolution in the mortgaged mind, due to a moment of historic negative types the customer chooses the security of knowing what is going to be paid.
However, experts advise to look at different aspects:
a.- The perfect mortgage does not exist: You must visit different entities, handle all kinds of options and know what kind of products are offered by the market.
b.- Calculate before choosing a variable rate: With the current scenario you must think whether you would be able to take a rise in Euribor + 5% or even 6%.
c.- The fine print of the fixed rate: This is an ideal moment to ensure a fixed fee with no surprises. Since a future mortgage change will force us to pay commissions of up to 5%.
Novelties on mortgage matters
It is still a draft, but the future law on mortgages promises several advantages to the mortgaged.
The most prominent are:
a.- The cost of repayment of mortgages will cheapen, with a maximum fee of 0.25% in the first three years of the loan. From the fourth the cost is zero.
b.- A change in reference currency is permitted on the mortgage.
c.- The study commissions of the mortgage will be eliminated, only the payment of an opening commission.
d.- A greater transparency on the loan, clarifying the distinct clauses.
e.- Only hired linked products are allowed when purchase products linked allowed when included in the loan guarantee
f.- An extreme surveillance for mortgage intermediaries.
g.- The collection of incentives to bank employees is forbidden if they depend on the amount of contracted mortgages
h.- An specific training is required for employees involved in the mortgage contract.
