The rise of the Euribor since the beginning of the year has reversed the mortgage strategy of Spanish banks, which have been gradually increasing the price of fixed-rate mortgages for months to encourage consumers to switch to variable-rate mortgages.
In this way the banks are profiting from the rise in the main reference rate for mortgages. The banks’ fixed rate offers were the cheapest in December. More than 62% of new mortgages taken out in December were fixed-rate. This was due, on the one hand, to the impetus given by the high customer demand for this product. And, on the other hand, to the low profitability of variable interest rates. The Euribor reached one of its lowest levels and was even negative at -0.501%.
Complete reversal
However, barely six months later, the situation has turned 180 degrees. Now, four Spanish banks (BBVA, Bankinter, Ibercaja and MyInvestor) have almost doubled the prices in the fixed segment. Mortgages with a fixed interest rate of 1%, prices that were still being offered at the end of 2021 and even at the beginning of 2022, are now over.
Rates almost double now
In recent years BBVA was one of the first banks to get ahead of the price declines of fixed rate mortgages. An incentive for many other banks to follow suit. BBVA closed the year with an annual percentage rate (APR) of 1.71% for these real estate loans. This is now almost double at 2.81%. Ibercaja has one of the most aggressive mortgages on the market. And last year lowered the fixed interest rate to 1.5%. Meanwhile, the annual rate is already 2.95%.
The same situation occurred with MyInvestor, the digital bank of AndBank, which at the end of 2021 was one of the institutions with the best offer in the fixed rate segment, with a rate of 1.49%. Now, six months later, the annual rate stands at 2.8%. Bankinter no longer offers this product at 1.95%, but charges 3.52%. The rates mentioned are calculated including the ‘bonuses’, i.e. they are the lowest rates the customer gets in return for being tied to the bank by taking out other products, such as the payment of salary or taking out an insurance.
