The mortgage comparator iAhorro has published this Wednesday its iSavings Index, a quarterly report that analyzes trends in the mortgage market. In it, he compares the figures collected by the National Institute of Statistics (INE) and those handled daily by the more than 60 mortgage experts who advise iAhorro users and help them compare and negotiate the offers made by banks.
The iSavings Index comes, then, from the need to give citizens a real vision of the situation of the Fixed and variable rates at which mortgages are signed in Spain since those offered by the INE are much more generalized and are far from the reality that each person lives. Hence the differences are overwhelming.
If we analyze the data month by month, we see that the annual average of the fixed rates signed by iAhorro in 2021 was 1.21%, while that provided by the INE (in the absence of data for the month of December) was 2 .72%. We see that there is a difference of 1.51 percentage points between one statistic and another. This is because “the people who come to iAhorro compare and negotiate offers from more than 20 banks, while the Spanish average goes only to their bank of all life”, affirms the CEO of the mortgage comparator, Marcel Beyer.
Beyer adds that “at the end of 2021, in November, iAhorro signed its first fixed mortgage at a TIN of 0.55% and in December that fact was repeated on several occasions”. In addition, he adds that during the previous months fixed mortgages were already signed with rates of “0.65-0.70%”.
With regard to variable mortgages, the difference is also notable. Specifically, the average achieved in this regard by iAhorro during 2021 was 0.87% and that published by the INE reaches 2.20%. Therefore, between the variable rates achieved by the comparator and those offered by banks in Spain to their “lifelong” customers, there is a difference of up to 1.33 percentage points.
How to save up to 80,000 euros on a fixed mortgage?
From iAhorro they explain that another of the reasons why they bring to light their iAhorro Index is the generalization of the INE data. According to this official source, the average amount of mortgages in Spain was 138,189 euros in November. But this is not the reality of all areas. For this reason, in the mortgage comparator they differentiate between a mortgage of 150,000 euros that could be requested in a small town or city and one of 300,000 euros, the average of what homes are worth in large cities such as Madrid or Barcelona.
“We have users who come with the offer of an entity, which is usually the one they have always had, and in 70% of cases we can improve it,” says Marcel Beyer. For example, in the case of a fixed mortgage (which are the most signed in Spain) of 150,000 euros at 30 years and with the average TIN at which the mortgages were signed in October (2.74%), according to the INE , we would pay a total of 220,164.31 euros adding 70,164.31 in interest throughout the life of the loan. However, if we had signed the same mortgage with a fixed TIN of 1.11%, the average registered by iAhorro in the same month, for the same operation we would pay 176,427.28 euros, of which 26,427.28 would be interest. Ultimately, when comparing offers and negotiating them, we could save up to 43,737.03 euros.
In the case of a fixed mortgage of 300,000 euros over 30 years and with the average TIN at which mortgages were signed in November (2.74%), according to the INE, we would pay 440,328.63 euros, of which 140,328.63 would be interest . If we had signed the same mortgage at the average fixed TIN of iAhorro in November (1.11%), the same operation would cost 352,854.57 euros (52,854.57 in interest). In this way, we we would save 87,474.06 euros on the loan.
More than 80% of signed mortgages are fixed, according to iAhorro
The INE ensures that each month more than 30,000 mortgages are signed in Spain. According to the data offered this Wednesday by the entity, last November 36,220 were reached, of which 67% were at a fixed rate and the remaining 32.5% at a variable rate. If we compare these data with those offered by iAhorro, we can see that, when comparing, the fixed rate wins many more followers: last December by the mortgage comparator, 82.39% were fixed rate and in November 2021 this percentage rose to 86.20%.
With the Euribor, an indicator that marks the rates of variable mortgages, at historic lows (in December it stood at -0.502%), it might seem like a good time to ask precisely a variable rate mortgage. However, the CEO of iAhorro alleges that “in 10 years the Euribor party will be over and there is almost no room for maneuver in the fixed rate” since it is at a minimum due to the fact that the banks have greatly improved their offers in the last months. Another reason is that most mortgage loans are intended for the purchase of first residences and longer terms to pay them, 30 years on average. However, variable mortgages “are interesting for those who request a loan for second homes or want to pay their mortgage in a shorter period.”
The CEO of iAhorro also assures, “just as 2021 was a good time for a client to take out a mortgage, it was also an ideal time for subrogate mortgages that were signed in previous years with interest rates above 3%. And in 2022 this opportunity will remain. It is always convenient to compare what was signed with market trends.”
100% mortgages: do they exist?
The bigger the financing percentage, the less money saved the user needs to have for the entry of the house. The most common is that banks finance around 80% of the property price, although this percentage may be higher or lower depending on various factors. “The client’s solvency, income and employment profile These are three characteristics that banks take into account when granting higher financing”, lists Marcel Beyer, who adds that “if the client has guarantees and a high net worth, they can also opt for higher percentages”.
According to data from the iAhorro Index, last December, 94.25% of the people who went to the financial comparator to look for the mortgage that best suited their needs obtained up to 90% financing and almost 6% between 90 and 100%. These data vary each month: in January and March, the data of those who managed to get the bank to finance more than 90% of the value of the home exceeded 8%.
Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.