Denmark, France and Portugal are the countries with the cheapest mortgages in Europe, with interest rates that on average stand at 1.11%, 1.57% and 1.93%, respectively. Spain is resisting and, despite the strong increase in rates, it occupies the fourth position, with 2.02%, according to data from the European Mortgage Federation (emf) corresponding to the third quarter of 2022.
For the whole of the European continent, the unweighted average interest rate was 3.48% in the same period, which places Spain 42% below the European average with the cheapest average rates. When it comes to fixed mortgages, Spain is even better off.
Taking age into account, for a fixed-rate mortgage up to five years old, Spain climbs to second place with the cheapest rates of 2.29%, second only to Finland (1.52%). If the seniority is over ten years, it appears as the country in all of Europe with the most competitive rates (1.79%), according to the EMF.
The general director of the Institute of Economic Studies (IEE), Gregorio Izquierdo, in statements to Servimedia, considers that “the financial sector in Spain is especially efficient and competitive in the conditions that they offer to their borrowers in relation to our environment”. In fact , “was among the first to anticipate the foreseeable change in the interest rate scenariooffering new mortgages in very attractive fixed rate conditions”.
Precisely, this policy has been applied CaixaBank for six years with the signing of 70% of its mortgage portfolio at a fixed rate, long before the increase in interest rates. Currently, for the bank it already represents 90% of new mortgage contracts with the aim of minimizing the impact of the escalation of interest rates on its clients and in line with the recommendations of the Bank of Spain.
Other banks maintained similar figures last year in this regard, such as Bankinter, which in the first quarter of 2022, 80% of the new mortgage contracts were signed at fixed ratesa figure that has gone down in the last year to reach 42% in the same period of 2023.
Izquierdo highlighted that, “unlike in the past, in which mortgages were referenced with variable rates in relation to the Euribor, now close to two thirds of the mortgages that are granted are made with fixed rates, which by definition are configured on the basis of medium and long, which are not only more stable, but are currently also more favorable references, after the rises that occurred this past year in short rates”.
Thus, the latest INE statistics show that 65.7% of the new mortgages constituted on homes in February were fixed and the 34.3% remaining to type variablewhen three years ago it was practically the other way around.
Examples of entities that opted for the variable rate in 2022 are banks like Unicajawhich maintained 60% of its individual portfolio at a variable rate, and Ibercaja, with 85% of its new mortgage production last year.
Situation with mortgages in Europe
In Europethe rise in the Euribor and the increase in the cost of the variable-rate mortgage installments already contracted has also caused there to be an increase in the contracting of fixed-rate mortgages. In this way, the countries where the signing of new fixed mortgages was most noticeable in the third quarter of 2022 was Belgium, with 84.9%, Spain, with 61.1%, and Germany, with 41%.
The general director of the IEE clarified that “our real estate market is, within Europe, one of the most solid and with the best fundamentals and therefore with less risk in ratios such as financial effort, creation of homes and employment, price levels and debt… which allows you to enjoy lower rate spreads than those of other countries.
Izquierdo asserted that “the trend in new credit operations is clear, and it will foreseeably continue in the coming months.”Most mortgages are granted at fixed rateswhich both reduces the financial effort in the short term while mitigating the risks of financial vulnerability in scenarios of interest rate rises such as those we have experienced in recent years”.
Finally, it concluded that “general recommendations cannot be made on the convenience of some references or others, since the changing needs and circumstances of each household are what ultimately determine and condition your financial needs”.
