Sumar‘s New Mortgage Proposal: A Jolly Good Idea or Just Jolly Ridiculous?

Ah, mortgages—the necessary evil of adulthood! Like a clingy ex that just won’t let go. And here we are with the latest twist in the ever-entertaining saga known as the Spanish economy. Sumar, you lovely bunch, have thrown a new proposal into the mix for the 2025 Budgets. What’s on the menu? A fully regulated fixed-rate mortgage linked to the ten-year Spanish Bond. That’s right, folks, we’re talking about a minimum of 1% APR and a maximum term of 30 years. You might want to hide your wallets!

Carlos Martín, Sumar’s economic spokesperson—and today’s chosen one—just delivered this gem at a press conference. He stated, “In Spain, of the total mortgages that are currently outstanding, 70% are at variable rates. This is the opposite of what happens in other countries like Germany or France, where the majority have a fixed rate.” So, if you were looking for a way to feel “abnormal and vulnerable,” congratulations, Spain, you’ve made it into the special club!

That’s right! More than 70% of the 626 billion euros in mortgage loans in Spain are going variable. It’s like living life on a roller coaster where the only thing ‘variable’ is how much you’re sweating at the end of the ride. Sumar wants to change that, claiming that the Spanish mortgage scene resembles a circus defect rather than a well-oiled machine.

Banks, Obliged to Offer It?

Here’s the twist: Sumar suggests that banks are obliged to offer this new regulated mortgage. It’s like telling a cat that they must suddenly love dogs. Good luck with that! The mortgage would be linked to the yield of the ten-year Spanish sovereign debt, but with a shockingly enticing French or German amortization system. Don’t let the fancy words fool you; it’s still a mortgage. This mortgage isn’t just a pretty face, though—there would be no opening or early cancellation fees, which is like being free from your gym membership for the first time!

And hold onto your hats, because this momentous mortgage comes with a stipulation: if you want one, you’d better have a stable job and keep your debts under 40% of your income. Because, let’s face it, no one wants to bail out another ‘too big to fail’ mortgage owner. You get a mortgage! (Only if you’re responsible.)

“Very Competitive” with Low Rates

Martín insists that this mortgage would be “very competitive” when interest rates are low. It’s like saying, “Don’t worry, love; my cousin in Brazil has a parrot that talks!” You can’t help but feel that he’s also dreaming about the *good ol’ days* of low interest rates, while the rest of us are left wondering if our savings will ever recover from the past few years.

For the banks? Martín’s confident that the risk is “zero.” The values of the guarantees would exceed the mortgage amount by 20%. Let’s just say, if banks had a drinks party, they would be the ones throwing back shots like they own the place! And remember, the mortgage guarantee in Spain is personal—in other words, if you flake, they can drag *everything* from your life into the mess, including your collection of novelty mugs.

So, there you have it, folks! Sumar’s offering us a mortgage that sounds suspiciously like both a risk-free bonanza for banks and a frightening gamble for first-time buyers. A regulated mortgage—could this be a step towards financial fairy tales, or are we just lost in a maze of misplaced optimism? Either way, keep your eyes peeled and your wallets close. Because the circus isn’t quite finished yet!

Sumar has proposed to the PSOE, within the framework of the negotiations for the 2025 Budgets, a initiative to develop a regulated mortgage with a fixed rate linked to the ten-year Spanish Bond, with a minimum of 1% APR and a maximum term of 30 years.

Sumar’s economic spokesman in Congress, Carlos Martín, presented this Friday a non-legal proposal that includes this proposal and which, as he has confirmed, is on the negotiation table for the 2025 Budgetsas well as another battery of measures that aim to introduce more fixed-rate mortgages in an “anomalous” variable market.

«In Spain, of the total mortgages that are currently outstanding, 70% are at variable rates and this is the opposite of what happens in other countries like Germany or France, where the majority have a fixed rate,” Martín said at a press conference this Friday.

Specifically, more than 70% of the 626,680 million of the total outstanding balance in mortgage loans is subject to a variable interest rate, which puts Spain in a position, says Sumar, «abnormal and vulnerable» in the face of any generalized inflationary process such as the one that occurred after the war in Ukraine.

Banks, obliged to offer it

In this scenario, Sumar suggests that banks are obliged to offer to its clients this new regulated mortgage, which would always be linked to the yield of the ten-year Spanish sovereign debt that exists at that time.

Other characteristics of this mortgage are that Your amortization system would be French or German and would have a maximum of services linked to the mortgage loan. Specifically, the direct debit of the payroll into the account where the mortgage payments are drawn. It would also not have opening or early cancellation fees and the maximum credit limit regarding the value of the home would be 80%.

«All banks would be obliged to offer this mortgage and this mortgage would be written in the Official State Gazette with all its clauses in such a way that there would be no room for any type of abusive clause to appear», remarked the economic spokesperson.

The conditions to be able to access that person are that they have «stability in the labor market» and that the cost of the mortgage plus other debts of the family does not exceed 40% of their income, which, according to Martín, is what is «within the reasonable risk standards» with which banks now offer mortgages .

“Very competitive” with low rates

Martín has defended that this mortgage would be “very competitive” in times of low interest rates, which is when the Bond spread is reduced. «It would be a very convenient mortgage for homes», he stressed. Likewise, they would compete with the “monetary illusion” generated by the variable mortgage in times of low rates.

Regarding the risk that banks would assume with this new mortgage, Sumar says that it would be “zero.” This is because, on the one hand, The value of the guarantee provided would exceed the amount of the mortgage loan by 20%. On the other hand, the mortgage guarantee is personal in Spain, that is, the mortgaged party responds with all his income and assets to respond to the payment of the debt and not only with the value of the mortgaged home, there being no dacion in payment except in cases of extreme vulnerability.