THE GRANTING OF FIXED RATE MORTGAGES ARE DUPLICATED IN SPAIN

During 2019 the granting of fixed-rate mortgages rose to 65%, which is 13% of the total loan portfolio, three times more than at the end of 2015.

Three years ago, fixed-rate mortgages only constituted 4.5% of the credit balance; currently, this percentage has increased up to 12.6% respect to active loans in Spain, according to the Spanish Mortgage Association.

For several years, some financial institutions (CaixaBank, BBVA, Banc Sabadell, and Bankia) have positioned themselves supporting the fixed-rate mortgages since they allow the client to improve their payments management because the loan doesn't change throughout its life. In addition, the possibility of default decreases for entities, since the fee will not oscillate upwards for the user.

It should be noted that fixed-rate mortgages are subject to higher interest rates to ensure the loans' profitability since they do not depend on economic fluctuations.

The new mortgage law which will enter into force on 16th June of 2019 seeks to encourage the conversion from the variable mortgages to the fixed-rate mortgages with the commissions' reduction that the client had to face until now. The 0.5% commission of the amortized capital is reduced into 0.15% if the change is made during the first five years' life of the loan. If it's done after 5 years, then it is reduced from 0.5% to 0%.

However, Bank of Spain considers that this new regulation discourages this mode of interest since it increases the cost of the early repayment to customers who have a fixed-rate mortgage and doesn't allow another agreement.

Source: El Economista (Lunes, 25 de marzo). La concesión de hipotecas a tipo fijo se duplica en tres años, hasta el 65%. Lugar de publicación: https://www.eleconomista.es/.