Fixed rate product growth in Spain

Spanish Banks product offerings

Up until recently the mortgage product types available in Spain were predomintaley variable trackers tracking the 12 month Euribor.

Each month over 95% of all loans completed on this basis with only a handful of loans being completed on a fixed rate basis.

Fixed rates 

Most fixed rate offerings, when they were in fact offered by a bank, were much higher than the underlying variable rate, the process of obtaining them was difficult and they did not offer in either the medium or long term good value for money.

Things in the last few months have changed. Spanish Banks, or at least most of them, are now offering a wide range of fixed rate options ranging from mixed fixed rates, which have short term fixes of up to 5 years followed by a variable rate, to fill term fixes for as long as 30 years.

Why consider a fixed rate now

No longer are the fixed rates well above the variable but appear to offer long term stability at very low interest rates. Whilst because interest rates across the world are very low currently the fixed rates do not match current levels given rates are likley to rise across the years a loan is held the rates at an average of 3.25% for a full 20 years look to be a good bet.

Applying for a fixed rate

When applying for a fixed rate the application process remains more diffcult than for variable due to the fact you cannot be sure what rate finally you will be offered and what products you will have to contract with the Bank to achieve the rate required. Early repayment penalties are higher and should be taken into consideration when deciding on the right product for a client. Fixed rates are not right for everyone but where as they could not be consideered at all in Spain last year, now they should form part of any Spaish advisers product portfolio and best buy tables.

Read the full article.- Fixed rate mortgages in Spain