Mortgages take advantage of the pull of subrogation to switch to fixed-rate mortgages

Mortgages take advantage of the pull of subrogation to switch to fixed-rate mortgages

The Euribor at a minimum makes banks offer a very competitive interest in fixed-rate loans

The mortgaged could benefit from the subrogation of their mortgages.

During the confinement, the war that the bank maintains for mortgages moved to the terrain of subrogation.

With this a double objective was pursued. On the one hand, to compensate the signing of mortgage loans that were suspended due to the suspension of the activity.

And, on the other hand, the banks made sure in this way to attract clients with a good financial profile (who had shown for years that they were up to date with their fees) but who were subscribed to high spreads over the Euribor (especially mortgages signed during the years hard from the financial crisis).

“In the case of very good profiles, we are returning to the trends of the crisis. In this case, these citizens can obtain fixed or variable mortgages very close to 1.5%, something that occurred in some months of 2010, but which until now had not been seen again ”, highlights the director of IAhorro mortgages, Simone Colombelli.


Fixed-rate mortgages are preferred

The Euribor, the index to which most mortgages are referenced, closed September at -0.415% and could close October setting a new record, since, for the moment, it is trading at -0.45%.

This means that the offers that the mortgaged seeking subrogation can be very competitive in the field of mortgages, both variable and fixed rate.

Surrogacy grew 50% year-on-year in July

However, there is a greater predilection for fixed-rate mortgages, precisely because those who seek to subrogate to a mortgage can do so with very advantageous conditions, until they achieve an interest close to that 1.5%.

Since MyInvestor they point out that the trend in the last year has been to change to a fixed rate. “Clients want to take advantage of the exceptionally low fixed rates. So far in 2020, almost 75% of the loans we have granted are subrogations and of these, almost half are at a fixed rate, which represents a great change in trend.

In 2019, only 20% of the clients who changed their mortgage did so at a fixed rate ”, he points out Nuria Rocamora, co-CEO of MyInvestor.

This trend is already reflected in the National Institute of Statistics (INE). In 2010 the percentage of fixed mortgages was barely 4% and now they account for 49% of the loans that are signed each month.

In addition, in July, surrogacy increased 50% year-on-year, according to the statistical agency.

2013 mortgages win with change

In this way, those who acquired their loan in 2013 are the ones who would save the most if they made a subrogation at this time without lengthening or reducing their installment and term. It should be borne in mind that in that year interest rates averaged 4.10.

If we take into account the trajectory that rates have been marking in recent years, MyInvestor considers that “it is a good time to subrogate mortgages because current interest rates allow offering very competitive conditions at fixed and variable rates. It is very likely that we will not see prices as low as the current ones in the future ”.

The co-CEO of MyInvestor, clarifies that “if we compare two fixed-rate mortgages with a term of 25 years and a capital of 150,000 euros, in which the client reduces his fixed interest rate from 2.80% to 1.69%, the client will save during the entire life of the loan, almost 25,000 euros ”.

It must be borne in mind that in the subrogation we will save more as long as the price of the mortgage is higher, therefore, in the case of the second residence, the price will vary less than in the first due to lower mortgages.

All profiles can benefit

“What is certain is that more and more banks are offering to obtain mortgages from other entities, as it is a good way to obtain income and there is a relatively large demand from customers who are dissatisfied with their conditions and want to improve them” (especially those who signed their mortgage between 2010 and 2015, when the interests were much higher than now) points out Miquel Riera, expert in mortgages of HelpMyCash.com.

The good thing about this situation is that it is an interesting option for any profile. Especially when the forecast is for the market to remain more or less stable over time. Although a variable mortgage is very interesting for many, others may prefer the peace of mind of planning their finances at a fixed rate at very attractive levels at this time.

In any case, “what does not make sense is to contract mortgages that during the first years apply a fixed rate and after a while, which is precisely when the rates will rise, they change to a variable rate,” says Nuria Rocamora.

Taking into account that the bank will re-analyze the client’s profile, this may have improved their conditions, so that “an urban profile with a mortgage that is in its initial phase and that at the time of contracting the loan did not obtain good conditions you can now find lower interest rates. In addition, during these years he has had a professional change and his financial situation has improved with more stability and higher income ”, points out Simone Colombelli.

Other options that may lead us to want to find another mortgage will be to improve the commissions that are paid or reduce the combined products without having the need to cancel it and assume other expenses again.

The Euribor at a minimum makes banks offer a very competitive interest in fixed-rate loans

The mortgaged could benefit from the subrogation of their mortgages.

During the confinement, the war that the bank maintains for mortgages moved to the terrain of subrogation.

With this a double objective was pursued. On the one hand, to compensate the signing of mortgage loans that were suspended due to the suspension of the activity.

And, on the other hand, the banks made sure in this way to attract clients with a good financial profile (who had shown for years that they were up to date with their fees) but who were subscribed to high spreads over the Euribor (especially mortgages signed during the years hard from the financial crisis).

“In the case of very good profiles, we are returning to the trends of the crisis. In this case, these citizens can obtain fixed or variable mortgages very close to 1.5%, something that occurred in some months of 2010, but which until now had not been seen again ”, highlights the director of IAhorro mortgages, Simone Colombelli.


Fixed-rate mortgages are preferred

The Euribor, the index to which most mortgages are referenced, closed September at -0.415% and could close October setting a new record, since, for the moment, it is trading at -0.45%.

This means that the offers that the mortgaged seeking subrogation can be very competitive in the field of mortgages, both variable and fixed rate.

Surrogacy grew 50% year-on-year in July

However, there is a greater predilection for fixed-rate mortgages, precisely because those who seek to subrogate to a mortgage can do so with very advantageous conditions, until they achieve an interest close to that 1.5%.

Since MyInvestor they point out that the trend in the last year has been to change to a fixed rate. “Clients want to take advantage of the exceptionally low fixed rates. So far in 2020, almost 75% of the loans we have granted are subrogations and of these, almost half are at a fixed rate, which represents a great change in trend.

In 2019, only 20% of the clients who changed their mortgage did so at a fixed rate ”, he points out Nuria Rocamora, co-CEO of MyInvestor.

This trend is already reflected in the National Institute of Statistics (INE). In 2010 the percentage of fixed mortgages was barely 4% and now they account for 49% of the loans that are signed each month.

In addition, in July, surrogacy increased 50% year-on-year, according to the statistical agency.

2013 mortgages win with change

In this way, those who acquired their loan in 2013 are the ones who would save the most if they made a subrogation at this time without lengthening or reducing their installment and term. It should be borne in mind that in that year interest rates averaged 4.10.

If we take into account the trajectory that rates have been marking in recent years, MyInvestor considers that “it is a good time to subrogate mortgages because current interest rates allow offering very competitive conditions at fixed and variable rates. It is very likely that we will not see prices as low as the current ones in the future ”.

The co-CEO of MyInvestor, clarifies that “if we compare two fixed-rate mortgages with a term of 25 years and a capital of 150,000 euros, in which the client reduces his fixed interest rate from 2.80% to 1.69%, the client will save during the entire life of the loan, almost 25,000 euros ”.

It must be borne in mind that in the subrogation we will save more as long as the price of the mortgage is higher, therefore, in the case of the second residence, the price will vary less than in the first due to lower mortgages.

All profiles can benefit

“What is certain is that more and more banks are offering to obtain mortgages from other entities, as it is a good way to obtain income and there is a relatively large demand from customers who are dissatisfied with their conditions and want to improve them” (especially those who signed their mortgage between 2010 and 2015, when the interests were much higher than now) points out Miquel Riera, expert in mortgages of HelpMyCash.com.

The good thing about this situation is that it is an interesting option for any profile. Especially when the forecast is for the market to remain more or less stable over time. Although a variable mortgage is very interesting for many, others may prefer the peace of mind of planning their finances at a fixed rate at very attractive levels at this time.

In any case, “what does not make sense is to contract mortgages that during the first years apply a fixed rate and after a while, which is precisely when the rates will rise, they change to a variable rate,” says Nuria Rocamora.

Taking into account that the bank will re-analyze the client’s profile, this may have improved their conditions, so that “an urban profile with a mortgage that is in its initial phase and that at the time of contracting the loan did not obtain good conditions you can now find lower interest rates. In addition, during these years he has had a professional change and his financial situation has improved with more stability and higher income ”, points out Simone Colombelli.

Other options that may lead us to want to find another mortgage will be to improve the commissions that are paid or reduce the combined products without having the need to cancel it and assume other expenses again.