GONZALO BERNARDOS | Gonzalo Bernardos warned of a coup that would revolutionize mortgages in Spain: “The war has already come…”
He who warns is not a traitor, and Gonzalo Bernardos This statement could well be awarded. The economist has been warning for months that descent interest rates would translate to “mortgage warThat is, banks will open a “credit tap” reduction in the price of money and they will offer loans on more favorable terms to attract new customers. This situation It would accelerate, the expert believes, because the European Central Bank (ECB), after approving in October a second consecutive reduction of 25 basis points in the base rate, was reduced to 3.25%.
The European Central Bank (ECB) began cutting interest rates in June after eight years of continuous increases. This reduction continued last September and was ratified in October. A decrease in the price of money is always good news for families’ pockets and for mortgages, but it is also important to say that this affects economic growth. In fact, the ECB, like the International Monetary Fund, does not hide the fact that the reasons for its decision are relief from inflationbut also fears of slowing economic growth, which in Europe also fuel Donald Trump’s recent victory in the USA.
Immediate effect on mortgage
If interest rates fall, Mortgage rates are falling, it’s as simple as that. Cause? Euribor, the benchmark index for most variable-rate loans, is closely linked to the ECB’s price of money, which is set below 3%, down from above 4% just 12 months ago.
All this led to “Mortgage war” between banks is inevitable. “The mortgage loan will be used as hook to get a good client for many years“, the economist warned on his YouTube channel and soon after gave practical examples: “You can now get a mixed mortgage with an interest rate of 1.5% for the first five years,” he published in X.
“They don’t offer it to everyone.”
The expert’s statement must be taken into account, but it is also true that the trend is different. High-interest blended loans were the star of the market in the second half of 2023 and the first half of 2024. Fixed rate mortgages are again the main protagonist of the Euribor fall: The struggle between banks is such that they offer loans at 3% for a period of 30 years.
The economist also said that “There will be entities that will provide mortgages up to 100% from the appraised value of the house.” But we must not forget that the bank always wins. Such offers or a mixed rate of 1.5% for five years “are not offered to everyone”– he reminded. While banks reserve them for “clients with sufficient solvency and confidence“, comments on YouTube.
Developing his forecast, a few days ago he gave another real example mortgage with a fixed interest rate of 1.85%which he described as a “super-bargain” and which was provided for 80% of the valuation cost.