The range of options is not just limited to fixed or variable rate mortgages. The bank has in its trading proposal a product that has practically disappeared since the financial crisis and is now being revived in the midst of surging demand and the rise of Euribor: mixed type.
This type of mortgage loan, as explained on HelpMyCash, has mixed benefits. That is, it combines a fixed interest and a variable interest. “During the initial period, which usually lasts between five and 15 years (although it depends on each bank), the interest is fixed. And for the rest of the repayment period, the interest is variable, i.e. tied to a benchmark such as Euribor,” says the financial comparator.
In practice, this means that the consumer pays fixed installments during the first years of the life of the mortgage thanks to the fixed interest. After that, the interest becomes variable and thus exposed to fluctuations in the benchmark, which is often the Euribor.
The offering of this product has changed dramatically in the past year. The years after the financial crisis practically wiped the blended mortgage off the map. It has now re-emerged and more and more banks are offering it publicly. The aforementioned comparator indicates that it is in the commercial offer open to the public at Openbank, Bankinter, Caja de Ingenieros, EVO Banco, ING, Cajasiete, Banco Santander, Caja Rural de Granada, Ibercaja, Cajaviva, Targobank, Hipotecas.com, UCI, Banca Pueyo, Triodos Bank. A total of 15 entities are committed to this, although “a customer can always try to negotiate the privilege of this product with their bank or other entities, even if they don’t offer it directly.”
HelpMyCash has discovered more interest in these products and more users asking for information about the terms. And although the fixed rate still prevails, iAhorro put numbers for this expansion in the last months of 2022. This latest platform reports that “24.14% of companies registered by iAhorro in November had a mixed interest rate and this data rises to 35.78% In this sense, Marcel Bayer, CEO of Comparator, confirms that if the trend continues “in 2023, the forecast we have is that at least one in five mortgage holders will choose the hybrid mortgage”.
Advantages and disadvantages
One of the advantages of a fixed mortgage is the stability it provides to the customer because he will know at all times what he is going to pay in installments. The variable, for its part, has the risk of exposure to Euribor but also the benefit that the share will fall if the index falls.
A hybrid mortgage combines the advantages and disadvantages of both methods, although there are differences. “In terms of benefits, a blended mortgage is safer than a variant. Since his interest is fixed during the first years, the customer is protected, in that period, from the fluctuations of Euribor. In a context like the current one, with this increasing index, this is particularly useful.” help.
This is the percentage of blended mortgages signed in December
Similarly, the comparator highlights that the fixed rate for hybrid loans is typically lower than the rate for a purely fixed mortgage: “less than 3% less on average in the former than in 3.5% average per second. In other words, during the initial period, the customer can pay more affordable installments than a fixed-term mortgage.
As for the disadvantages, blended mortgages are less secure than fixed mortgages, because their protection does not last forever: when the initial period ends, the interest becomes variable and can go up or down depending on fluctuations. Euribor“,” point to the same entity. Also, if the index goes down while the fixed price is in effect, then the user cannot benefit from it during that period, then it will be too risky to bear.
In this sense, they confirm from the comparison that «A Mixed mortgage It is of interest to the person who wants to protect themselves from Euribor (at least during the early years) and who cannot find a good rate fixed rate mortgage. It is also recommended that the customer try to repay as much of the loan as possible during the early years to shorten the period in which they are exposed to Euribor.