The latest data points to a reactivation of the real estate market in terms of property sales, although renting is also seen as a positive option.
The BCE policies that are keeping the Euribor low, roughly 0.22%, and the attractive mortgage rates being offered by some financial institutions like: Kutxabank (Euribor 1%), ING Direct (Euribor 1.49%) and EVO Bank (Intelligent Mortgage), is leading many to consider purchasing a home.
Having reached this point, several questions come up about what we remember and have learned from the crisis, including, “What type of interest rate suits me best?”
Of the mortgages registered in December 2014, 6.4% were set up with fixed interest and the other 93.6% with a variable interest rate, in most cases based on the Euribor. Data from the Spanish Statistical Office (Instituto Nacional de Estadística - INE).
Each buyer, when choosing a mortgage, must consider not only the type of interest rate but also other issues to best fit their income level.
Interest rate: In the long term, fixed-rate mortgages can end up being a bit more expensive (we’re currently looking at interest rates starting at 3.50%). So, the average payments, according to the INE, on a 21-year mortgage for 104,950 euros at a fixed rate of 3.90% would be, throughout the length of the mortgage, 611 euros per month. With a variable interest rate, based on the Euribor with the current average differential, the payments would be 562 euros per month. But if the Euribor went up to 1.5%, monthly payments on the same mortgage would be 592 euros. And if it went up to 2%, 620 euros per month.
Mortgage length. Variable-rate mortgages can currently be paid back in up to 30 years, and in special cases up to 35 or 40 years. However, it is uncommon for fixed-rate mortgages to be more than 20 years.
Percentage of capital financed: A variable-rate mortgage offers up to 80% of the appraisal value. With a fixed-rate mortgage, this goes down to 60%-70%.
Commitment. There is no big difference, direct deposit of salary and a life and home insurance policy.
