Read in Basque: Is it advisable to convert a variable mortgage into a fixed one?
Facing the mortgage payment is becoming a nightmare for many families, especially for those who once signed a variable rate.
With inflation shooting above 10%, interest rates at 1.25% and the Euribor exceeding 2%, more and more people are choosing to change their mortgage rate from variable to fixed. But beware, before jumping into the pool, keep in mind that it may not always be a good idea, as the economist has warned Endika Alabortin an interview in eitb.eus.
His first warning is accurate: “The banks are good businessmen, and if they see that they are going to lose with the fixed rate, they are going to increase the costs of this type of mortgage so that people do not change, or if they change, they continue earning the same or more”.
After all, changing your mortgage “has some costs”: “on the one hand, there is the differential in the interest rate, and on the other hand, the commissions that the bank can charge us, in addition to other services that they could add to the exchange, such as signing insurance with them”. There is more: “sometimes there are also registration fees, notary fees… and in certain cases even a new appraisal of the home.”
For this reason, Alabort urges “taking these expenses into account, calculating how much we get and making an assessment”.
In the case of wanting to make the change, he summarizes that there are three ways: “sign a new mortgage, which is the most expensive and complicated option; make the change with your own bank or subrogate with another entity.”
According to the last EITB Data, during the first quarter of this year the number of mortgages with a fixed interest rate has practically equaled those of variable rate. However, with the Euribor in full “sprint”, financial institutions are stopping encouraging, and even offering, fixed mortgages that, in some cases, have exceeded 3.6% APR.
The Association of Financial Users Asufin has put figures: the increase in interest rates translates into increases of about 1,000 euros per year if a standard loan of 100,000 euros is taken as a reference, with a repayment period of 25 years and with a Euribor of 2% plus the differential charged by each entity to each client.