Since 2014, banks were immersed in a struggle to offer cheaper variable mortgages and thus ensure maximum clients. The drop in the differentials led many experts to predict that in 2016 we would see how variable mortgages would be traded at Euribor + 0.70%.
Despite this, some months ago the differential war has stagnated, fewer and fewer entities that dare to reduce their variable mortgages. Why this situation? From the mortgage comparator Good Finance they point out that the main cause is the Euribor, which for four years has not exceeded the 1% barrier.
Will we see in 2016 the most expensive variable mortgages?
The last large discounts on variable mortgages were found at the end of last year and at the beginning of this, at which time many entities placed their offers around Euribor + 1%. The competition between banks was so strong that some clients waited to contract their mortgage a few months, to see if the differentials were reduced to levels like those we had in 2008, at Euribor + 0.70%.
However, it was important for banks to grant these mortgages eight years ago, since then the Euribor was listed at their maximum values . But the situation has now changed completely: the benchmark for most mortgages has been negative for four months and almost four years below 1%. So, as they warn from the financial comparator, banks are not interested in continuing to lower mortgage differentials.
Continue promoting their mortgages with low interest
On the other hand, they clarify that this does not mean that mortgages will become more expensive in the short term , since this depends on the next fluctuations of the Euribor, if it remains negative or if, on the contrary, it goes back in value. In addition, in order not to lose clients and to continue promoting their mortgages with low interest, many entities apply a fixed interest of around 2% during the first 12 or 24 months of the mortgage. Thus, while the Euribor remains low, stable income is assured and when it has surely risen again and the variable term arrives they would be profitable again.
Banks use fixed and mixed mortgages as an alternative
The banks’ new strategy focuses on promoting mainly their fixed and mixed interest mortgages . In fact, mixed mortgages almost did not exist two years ago and the fixed mortgages were a secondary product for banking, reserved for those very solvent clients who did not want to worry about the fluctuations of the Euribor in exchange for paying a very high interest.
Now, on the contrary, we can find offers below 2% TIN , some types that had never been seen. So much so that the latest data from the National Institute of Statistics indicate that for the first time, the granting of variable mortgages decreased more than 5% between February and March, while that of fixed mortgages increased from 10.8% to 12.4%.