More loans for housing and at lower cost
- Banks have expanded the mortgage offer with the lowest interest since the beginning of the crisis. The average annual saving exceeds 400 euros.
- 0.298% is the level reached by the Euribor at 12 months at the end of January. It is a new historical minimum.
- View or download the PDF of the February number of MiBolsillo.
Mortgage loan, a method to buy a home. GTRES
loan. Taboo word in the crisis that is ceasing to be. “Ask, ask for loans,” said Isidro Fainé on January 30 in the presentation of results of CaixaBank, in a message to families and customers to come to their offices if they want to get financing.
Fainé’s words are a clear example of what is happening at a general level in the financial sector. The banks have started 2015 with an aggressive commercial campaign for housing loans with the best conditions of the last seven years; spreads are well below the 2% they were just a few months ago.
The banks have started 2015 with a commercial campaign for housing loans
At the same time, the 12-month Euribor, the most used for mortgages in Spain, has marked the historical low of 0.298% at the end of January. This indicator reached over 5% in the middle of the crisis and the rates applied by banks, 4%.
The conclusion is clear: less money is needed to finance housing. And the benefits reach both the one who already has a mortgage at a variable interest with annual or semi-annual review of the Euribor, as well as the one who is thinking of applying for the loan.
According to the kelisto.es comparator, the average annual saving in an immobile property loan would be at this moment of 462 euros with respect to a year ago. Logically, the amount will vary depending on the agreed conditions, as well as the years of amortization. The comparator has made the analysis based on the means collected by the INE: a housing loan of 100,000 euros to be paid in 20 years , and a differential on average euribor of 1.77%, compared to 2.58% in 2014.
What has happened to make this change in favor of customers? Several factors come together. The economy seems to recover; the risk premium has returned to reasonable levels; interest rates in Europe continue at a historical low (0.05%); housing prices point to some stabilization and the ECB has extended its aid to the sector to bring inflation to 2% and loan to businesses and families.
The monetary institution will buy 60,000 million in sovereign bonds each month from March until September 2016. Spain will receive 9% of that amount.
More options after the ECB
Since the ECB announced its program of action, at the end of last January, more banks have shown their mortgage offers. There is more liquidity in the system and “banks try to get more business volume”, they say in Ibercaja.
However, the improvement of the mortgage market will only reach a few, since the granting of the loan requires high levels of solvency, with minimum income that in most cases exceeds 2,000 euros per month. In addition, they require a close link, such as insurance contracting or minimum spending on cards. Likewise, most of the entities finance a maximum of 80% of the value of the property. “The big doubt is whether there is solvent demand, the recovery of the real estate market has occurred through buyers who had liquidity and hardly needed a loan, I do not know how many people can buy the house, contributing 20 or 30% of the value in effective, we can fall back into the same mistakes “, warns Jordi Sullá, EFPA (European Association of Financial Advisors).
Choose the best hipotec in eight steps
- Search. The offer is wider than in previous years; therefore, there is the opportunity to see and compare the loan that best suits us. “It is the biggest financial decision of our life, so we should make sure that we dedicate enough time to take the most appropriate one,” they say at Idealista.com
- Income. Experts advise that the mortgage to be paid each month does not exceed 30% of the income received in the period.
- Commissions. You have to look at the fees that some entities apply when executing the contract as an opening. You also have to check the costs for total or partial cancellation, as well as maintenance.
- TAE. Under this term the interest that is going to be applied each year is included, including commissions or expenses.
- Bonding To benefit from the drop in cost, most banks require the client to be closely linked; that is, it forces you to take out insurance or a pension plan or to make a minimum monthly or annual expense with the card. We must analyze if it suits us.
- Types. Keep in mind that the Euribor is currently at a historical low, but the trend over time is to go up. If you choose a variable interest loan, know that the cost can be increased in your annual or semi-annual reviews. Always ask for loans that you can pay now and in the medium and long term. There are also mortgages at a fixed rate.
- Term. The amortization time should be as low as possible.
- Information. You have to read the contract before signing and ask everything that is not understood.