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Hybrid mortgages come from the trunk of memories



The picture of the current mortgage market is nothing like that of last year when Euribor had not moved in yet. Rising interest rates led by the European Central Bank (ECB) drove up blended mortgages. It has become the new star in the frantic mortgage market because it is at the crossroads between fixed and variable rate mortgages. In this type of loan, the installments remain unchanged during the first years (a period between 5 and 15 years). Once this segment is complete, the following classes are associated with the index. Banking entities had to remove this product from the trunk of memories, because with Euribor in negative numbers, it was trapped. Customers hiring people with a variable rate were more advantageous than fixed-rate customers. So far. The Euribor closed December at 3.018%, and is now above 3.3%. The European Central Bank is considering two increases of 0.5 points in February and March, so that official interest rates are left at 3.5%. Experts expect it to reach 4% by the end of the year, though it may be the end of the escalation. Related News Standard No Fixed, Variable, or Hybrid Mortgage: What’s the Best Option to Protect Yourself Against Euribor? c. Guinness Bank is making fixed loans more expensive due to higher reference rate The iAhorro Mortgage Comparator Index revises 2022 and presents forecasts for this year: a certain slowdown in the fixed mortgage and a ‘blow’ in the hybrid mortgage. They pointed out from the gate that as of October, the blended mortgage company accounted for barely between 8 and 3% of the total. However, this trend changed in November and December. 24.14% of companies registered by iAhorro in November had a mixed interest rate attached to them and this number increased to 35.78% in December. Additionally, if the trend continues, “in 2023, the forecast we have at iAhorro is that at least one in five mortgage holders will choose a hybrid mortgage,” according to Comparator’s CEO, Marcel Baer. The rise in hybrid mortgages is also due to the fact that banks are integrating this product: Openbank, ING, Banco Santander, Bankinter, Ibercaja, Laboral Kutxa, EVO and Hipotecas.com, among others. Hipoo mortgage broker gives examples. According to the projection of the monthly cost per interest rate chosen for an average mortgage of €143,222, if a fixed-term mortgage of 30 years and an interest rate of 3.25% is chosen, a fee of €623.81 per month will be paid. If you choose Euribor variable interest plus 0.79%, that will result in a fee of €666.54 per month. If you choose a hybrid mortgage with a fixed initial interest rate of 2.79% for a 10-year term and a variable final rate for a 20-year Euribor plus 0.49%, the result will be a fee of €587.73 over the specified period and €642.33 for the variable term. Cesar Petanco, Mortgage Expert at Hipoo, explains the pros and cons of mixed rate mortgages: “They are perfect during the storm that Euribor is going through. It gives the customer more confidence. The problem is, there aren’t a lot of banks that offer it.” The typical customer, for Betanco, is “a reserved person who wants security. You must have an income of about 2,000 euros per month; 3000 if there are two persons, with job stability. What the bank wants is that the debt ratio is no more than 30%. Doubts about the buyer Santiago Cuadrado is looking for a house in the north of Madrid. You have many doubts about the type of mortgage you should apply for. “It didn’t seem like the right time to ask for a variable,” Cuadrado explains, “the usual thing until recently. As for the hybrid mortgages I’ve consulted, they don’t seem like a good solution to me either because the amount that comes out of them is so high.” “The problem now with fixed mortgages is It is very high. You have to analyze it very carefully and take into account in my case the agreements of the company in which I work with certain banking entities.” More information Note Yes 20% wall of housing access: «I can pay the mortgage, but not the down payment» Real estate agents have always been advisors to those intending to buy a home on various aspects. Now the main issue is the blend rate mortgage. Ayme Sánchez reports that she receives many inquiries from clients about the best mortgage, the best one for them. “I always tell them it depends on the economic and personal circumstances,” he says. “Usually, they have a lot of prior information,” he adds. Although you can even find people who are unaware that the amount of mortgage they can ask for depends on the appraisal of the house.

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