The Euribor puts downward pressure on variable mortgage spreads
The Euribor closed December at 3.018%, the highest level since December 2008 and the forecasts are that the index to which most variable rate mortgages are referenced will continue to rise, but in a less abrupt way. Given this scenario, variable-rate mortgages will become more expensive due to the rise in interest, so banks will try to encourage their contracting by lowering the spreads, since mortgage loans continue to be the star product to attract new customers, doing everything possible for easy access.
How far could these differentials go? Industry experts believe that the floor will be around 0.50%, but demand and bank activity began. But the truth is that in this start of 2023 there are already entities that have mortgage loans around Euribor plus 0.50%. In addition to this differential over the Euribor, for the mortgage to be attractive it must also have a low exit interest. Commissions and linked products should also be taken into account, experts advise, since they can make the cost of mortgages more expensive.
Lastly, the mortgage customer should not
forget that contracting a variable-rate mortgage carries a certain risk, which is related to the rise in the Euribor. Therefore, before doing so, it is advisable to calculate how much you would pay in fees if the index climbed to 4%, a level that could end at the end of this year.
Among the banks with a lower differential and less linkage, the Evo Banco mortgage stands out. The entity sells a credit with this differential, of 0.50% and an exit interest of 0.99% the first year. To do this, it only requires the contracting of two products, among which the direct debit of a salary, for a minimum amount of 600 euros, and home insurance.
Unicaja and ING have in their showcase sending credits for the purchase of housing with a minimum differential. In the case of Unicaja, 0.50% is also applied on the Euribor, although with a fixed starting interest of 0.99% the first year. The entity also requires high bonding: in addition to domiciling payroll, home and life insurance, contracting car insurance or periodic contributions to investment products reduce the differential. For its part, the ING Orange Variable Mortgage starts with a fixed interest rate of 1.50% the first year, and then applies 0.59% on the Euribor. As conditions, it requires the contracting of life insurance and other home insurance, in addition to domiciling a salary of 600 euros per month.
Spreads below 0.70%
More entities have been lowering the differentials of their mortgages until placing them in a range that goes from 0.60% to 0.70% as the Euribor became more expensive. Thus, BBVA has a loan with a differential over the Euribor of 0.60%, although it applies a fixed interest of 1.49% the first year. To be able to access this offer, the client must direct payroll, also for a minimum amount of 600 euros, and take out life and home insurance.
Kutxabank is the next entity with a cheaper differential, with 0.64%, although in this case, the starting interest exceeds 2%. Specifically, 2.16%. In order to access this differential, in addition to direct deposit of a salary or pension, it is necessary to contract a pension plan or a fund, and home and life insurance.
Banco Santander also wants to compete in the mortgage business and offers a credit with a differential of 0.69% for its subsidized offer. The starting interest is 1.74% during the first six months. In order to access this product, it is necessary to domicile income (for a minimum import of 600 euros), the use of cards, the contracting of life and home insurance and that the home has an energy efficiency certificate.
For its part, Openbank, the digital subsidiary of Banco Santander, has a mortgage with a differential over the Euribor of 0.70%, although it starts with a fixed output interest of 1.70%. However, it is one of the entities that requires the client to be most connected, going beyond the direct debit of the payroll (for a minimum amount of 900 euros per month if it is a holder or 1,800 for two), life insurance and home. And it is that it also requires the contracting of cards and the supply of electricity and gas in Repsol.
All in all, the future mortgage customer can obtain better conditions if his profile is good and he negotiates with the entity. In this regard, experts recommend having at least three offers to achieve certain improvements.