Hipotecas cada vez más caras al ritmo del euríbor

The cost of Spanish mortgages is rising sharply as Euribor rates climb. The increase in eurozone interest rates and the surging Euribor are causing mortgage prices to soar rapidly. This trend, coupled with Spain's already high property prices, is beginning to dampen mortgage activity. The process is not drastic, but it foreshadows growing difficulties for Spanish families.

Mortgage signings in July showed the sharpest year-over-year drop in the past 25 months, according to official data from the National Statistics Institute (INE). The slowdown is attributed to two main factors: the growing cost of mortgages, making it harder to enter the housing market, and the median price of 3.01% in July, which is clearly above 2.96% in June.

Financial institutions are being forced to defend their margins amid the persistent Euribor rise. If the index stabilizes near or above 3%, fixed-rate offers are expected to stiffen by the end of the year. For those seeking housing or with adjustable-rate mortgages, waiting may prove costly, warn mortgage broker Trioteca. As mortgage prices become more demanding and property prices continue to climb, new mortgages are becoming increasingly expensive and larger.

In July, the average loan amount rose by 10.9% to a record high of 180,785 euros. The market shows active buyers and financial entities willing to grant credit, but each month, the housing price is pushing buyers to borrow more to complete the transaction. Ricardo Gulias, CEO of RN Tu Solución Hipotecaria, highlights this. The main threat for new mortgagees is the expectation of a long period of high rates.

Although the European Central Bank (ECB) is not planning to aggressively combat the rapid inflation rise with dramatic 50-point hikes as seen in the previous cycle, the Euribor discounts at least two upward movements. One is expected in October or December. With Euribor rising, experts recommend securing the best fixed-rate mortgages on the market.

In July, the median cost of these loans, where the same amount is paid for 11 months, surged to 3.03% from 2.89% and 2.83% a year ago. The era of fixed-rate mortgages below 3% is ending, urging buyers to act quickly. However, there are still plenty of attractive offers (see attached tables). Currently, three fixed-rate mortgages have official prices below 3.5% TAE (annual equivalent rate) with maximum tie.

These are Banca March, Openbank, and Ibercaja, with rates of 3.01%, 3.42%, and 3.49%, respectively. Rates have significantly increased since the 2.91%-2.98% band a year ago. For variable rates, the lowest differentials over Euribor are 0.49% from Kutxabank and 0.50% from Sabadell, Bankinter, and Coinc. The key element in these variable-rate mortgages that can significantly increase the operation cost is the initial fixed rate applied for the first year, which in some cases extends to 24 months.

This mechanism, used by banks to protect against Euribor fluctuations, should not be overlooked by mortgage borrowers. Currently, Euribor's upward climb makes variable-rate mortgages highly attractive. Mixed-rate mortgages, where banks offer higher quantities and qualities, remain an alternative for clients who believe low interest rates in the medium term can benefit them.

Banks like Sabadell, Pibank, Ibercaja, or ING are the most active in this segment. Mortgage brokers play a crucial role in reducing the cost of the loan to face what is usually the largest investment in a Spaniard's life. Beyond the official prices published by entities on their websites, homes can secure significantly more competitive rates through broker negotiations or through mortgage broker platforms.

These platforms, mostly free for customers, offer personalized proposals from financial entities and can provide rates significantly lower than those promoted by banks. In practice, customers fill out their personal and financial data on these platforms, and banks compete to win the business. If successful, the mortgage broker earns a fee from the bank.

Platforms such as Trioteca, Hipoo, Idealista, or iAhorro operate in an increasingly competitive market. Choosing the right term and type of mortgage is one of the most important decisions in a family's life, as it is the most significant investment. Therefore, in addition to getting the best price, it is crucial to select the most suitable term and mortgage that best fits individual risk tolerance.