The 12-month Euribor stands today Thursday at 3.642% in its daily price, the sixth consecutive rise in a month and a new ceiling. This rise in the indicator raises the provisional average for February above 3.5%, something that has not happened since November 2008. Given this situation and waiting for the rate hike from the European Central Bank (ECB) to be announced at the next meeting on March 16, many citizens doubt whether or not to buy a home now.
These are precisely the questions that the experts in this new digital mortgage office of the year from iAhorro y La Información tried to answer. Readers will be able to learn first-hand about the alternatives and solutions to their mortgage problems at the event held live on Wednesday, February 22, through the YouTube channel of the mortgage platform and on La Información social networks.
During the talk, information about alternatives to get cheaper mortgages and whether or not it is a good idea to buy a home now, before the ECB rate hike. In addition, it will also address other issues such as the best mortgages there are now in February, the options without links, if a sharp drop in house prices is expected or how much the Euribor can rise in the coming months.
See below the answers from the experts, Alberto Maroto, mortgage expert on the online platform, and Francisco Santos, mortgage advisor at iAhorro. In the coming months, La Información will continue to collaborate with iAhorro to inform readers in other clinics about current economic issues. If you have questions about savings or mortgages, you can send your questions through the email addresses: comunicacion@iahorro.com or consultorios@lainformacion.com, on any of the iAhorro or La Información social networks with the hashtag #HipotecasiAhorroLI.
1. Can they oblige me to contract ties with the mortgage?
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Is it legal for the bank to force me to contract electricity and gas with a specific company to acquire a mortgage with them? What are the best mortgages currently without having to assume more than one bond?
ANSWER FROM ALBERO MAROTO AND FRANCISCO SANTOS (IAHORRO) | No, electricity and gas are one more link and it works exactly the same as others on the loan. As of today, the links are not mandatory, they are a condition to lower the interest rate. Each of these will have a percentage penalty or bonus. You can take them off whenever you want, but you should know that when you do the review, that percentage will go up. What does happen is that the bank does condition the home insurance contract, life insurance or other products before going to the notary during the first year. From there you can change them or withdraw from these insurances after 15 days, according to the law, because the contract will not suit you in the end.
In fact, there are currently several options where banks do not have excessive ties. Of course, in case you do not want links, the entity that offers you a mortgage without some type of penalty is very rare and the most likely thing is that the TIN is higher. It is important to analyze the options that they offer us because in many cases they can benefit.
2. Should I wait to buy a home with the rate rise?
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I have 60,000 euros saved and I would like to apply for a mortgage to buy a flat in the south of Madrid. I am seeing that the rates do not stop rising, is it better to wait?
ANSWER FROM ALBERO MAROTO (IAHORRO) | No, right now I do not recommend waiting, because the drop that we believe housing will have will never be proportional to interest rates. In fact, they are now rising much faster than house prices are falling, especially in Madrid. What compensates right now is getting a mortgage with the lowest possible interest rate and with the links you can lower it even more. With this example we can see that if the rise in interest rates is 0.5%, the difference in the installment will not be that great.
3. Could house prices go down in the short term?
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Is a sharp drop in housing prices expected in the short term?
ANSWER FROM FRANCISCO SANTOS (IAHORRO) | We find three possible scenarios. The most optimistic we currently have is from Bankinter, which forecasts that the drop in 2023 will be 3%. In addition, he points out that considering that by 2024 it will drop 2% in the calculation of the total year. The Pisos.com real estate portal, considering that if inflation is maintained during 2023, it could drop to around 1%. Three other banks, such as CaixaBank, BBVA and ING, have an opposite scenario and foresee that in this case there will be a more moderate increase of around 2.2 and 3%.
4. What are bare ownership homes?
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I’ve seen at a housing fair that he talked about bare-property flats as an investment for older people. My father is 90 years old, has a low pension and a home in his name with the mortgage paid off. Could it be worth it as a supplement to his income?
ANSWER FROM ALBERO MAROTO (IAHORRO) | Yes, the nude property is another product that exists and that is aimed at people with an older age, from 80 upwards. This option allows you to sell the home, but you make an agreement to continue in it until you die. The only bad thing is that you take away from an important market niche that in the end is the one that usually needs mortgages and also some banks are not prone to finance purchases and sales of bare properties.
In contrast, we have other options that can also be useful for this type of profile, such as the reverse mortgage. The bank would pay a monthly fee, borrowing our house, as a complement and in the future, the heirs would be given the possibility of taking charge of the debt that this house has generated.
