2021: better mortgages but worse deposits | My money

Low interest rates guarantee a Euribor negative for a long period of time. Without a rise in governing rates on the medium-term horizon, and given the abundant liquidity in the financial system, the mortgage rate par excellence will continue to hover around the current minimum levels. The 12-month index has already broken the -0.5% barrier and experts do not rule out further falls. Thus, mortgages referenced to the Euribor will continue to get cheaper, benefiting the mortgaged. It so happens that some mortgage loans with very low spreads, below 0.5%, hardly pay interest or even have negative rates. The debate on whether clients should charge for their mortgages with negative Euribor is on the table, although the bank establishes a floor of 0%. Its justification is that a loan agreement cannot, by nature, have a negative interest.

Most forecasts suggest that the 12-month Euribor will remain below the zero threshold for a few more years. “The normalization of the Euribor to positive territory will depend crucially on the rate of recovery of economic activity and the demand for credits, but that could take at least a couple of years,” he predicts Olivia Álvarez, from Monex Europand. According to the bank itself, the Euribor will remain sunk at levels of -0.3% or lower until late in 2023. Thus, and taking into account the strong competition between banks, it is expected that new mortgages will also be cheaper. Currently, the average rates of loans for the purchase of houses are at historical lows of 2.44%. In the case of variables, the average interest is 2.12% and in the case of fixed ones, 2.84%, never seen before. Experts believe that there is room for more falls, although less intense than in recent years. In return, the bank will try to link more to the client to scratch profitability.

The bank expects the Euribor to remain negative until at least 2023

Fernando Rojas, from AFI, believes that the price of mortgages will continue to fall, as is happening now. He points out that there are banks that in a year and a half have reduced fixed rates from 2% to 1.7%. “There are still fixed rate offers,” he adds. “Fixed-rate mortgages will benefit from the mortgage war that is waged between banks for having the most competitive,” they point out from iAhorro.

For its part, Eduardo Areilza, from the consulting firm Alvarez & Marsal, considers that “the average rates are almost repriced or they have little left”. In his opinion, the interests of the mortgages will remain similar and the banks will prioritize the fixed rates, with which they obtain more profitability. “At current rates, both fixed and variable mortgages are a good option for the client,” he says. In any case, Areilza declares that what “the bank will try is to also offer other products to the client”, to link them to the entity. “What most interests banks is having the payroll or pension because, having the customer’s ability to pay, it is possible to place other products such as cards or consumer loans,” he asserts.

Experts see room for further falls in prices due to strong competition between entities

Bankinter recently lowered its fixed rate mortgages to 2.28% APR for 30 years, meeting conditions such as monthly income of more than 2,000 euros, life insurance, home insurance and a pension plan. And, in September, ING launched its first fixed mortgage at 1.79% APR for 25 years. Openbank offers a 1.50% APR, complying with the bonuses, and BBVA, from 1.76% APR to 15 years contracting products. The neobank MyInvestor discounts the fixed interest up to 1.704% APR for a term of 15 years. In variable rate mortgages the spreads are even lower than 0.8%, like the 0.69% offered by MyInvestor.

On the other hand, subrogation has become an attractive option, since most entities are willing to take on mortgages from other banks, improving customer conditions.

And compared to the minimum margin that banks obtain with mortgages, they do achieve it with consumer loans, at an average rate of 6.48% in new operations, which even so falls from 7.29% in January.

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