Do we owe to consider to hire a mortgage to fixed type?
23.02.2006
The euribor is plunged in an upward tendency that, probably, will spread in the next months. Before this increase, the mortgage loans to variable type can lose attraction.
The euribor, the reference index in eight of every ten granted mortgage loans, has risen in January up to 2,833 %, according to still provisional information. The mortgages that have been checked this month are already a little more expensive. And most likely they will keep on getting dearer in the following ones.
It still seems prompt to choose for this type of mortgages
The euribor has initiated a significant climb, which extends already for seven months. According to calculations of the Spanish Mortgage Association, a client with an average mortgage for 120.000 euros will have to pay approximately 350 euros per year from now on, with regard to January of the previous year. Before the upward tendency that the euribor presents, it seems necessary to analyze if there has come the hour of betting for the mortgages on fixed type. From the Spanish Mortgage Association (AHE) they think that the Spanish credit system has an excessive dependency of the euribor and they believe that it would be good that one will begin to encourage the loans hiring to fixed type. This is an interesting option, especially, for those more conservative clients, who do not want to have to adapt themselves to the swaying of the interest rates.
The variables are cheaper
At present, the mortgages to variable interest more sales of the market are indexed to the euribor and apply a differential of concerning 0,4 % (that is to say, they are located after the last review of the index in 3,233 %). This type of loans to variable type gathers both the increases and the descents of the interest rates.
For his part, on the market at present loans can be to an average fixed type of 4,5 % (it is the case of entities â~on-line†™ like Ibanesto or One e). This type of loans does not allow to fixed type to benefit from the descents of the interest rates, but yes - they avoid the increases.
Normally the loans usually have to fixed interest a shorter pay-off period and a nominal interest rate higher than the variable loans. That's why, also the monthly amortization quota usually turns out to be higher in the mortgages to fixed interest. On the market, the entities usually offer loans to fixed interest in a maximum term of 20 years, of average, while the mortgages to variable interest can be hired up to 50 years (with BBK or Labor Box).
From BBVA they make sure that to choose between variable or fixed mortgage is a personal decision that depends on the preferences and the situation of each one. â~Si the client prefers the forecast and does not wish the quotas to change, we recommend a mortgage to guy fijo†™, they affirm.
In any case, since the tendency that has been imposed on the market in the last years is to hire mortgages to variable interest, Gregorio Mayayo, president of the AHE, recommends to bear in mind the future evolution that there can register the indexes to which they are indexed. â~Cuando a loan is hired to variable interest rate it is not necessary to calculate the possibilities of amortization according to the initial interest rate, but to the most probable type in futuro†™, makes sure Mayayo. For a mortgage to 20 years, it would be necessary to think about an average interest of 6 %.
The intermediate option
It is good to analyze the big variety of products that exist on the market and his peculiar features. â~Hay products that incorporate a roof into the interest rates changes.
Others allow to change the quota into term or incorporate lack periods. The best advice that can be given to a family is that he evaluates carefully these characteristics and chooses what better him convenga†™, he adds.
Source: The Provinces Digitalis
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