Novation, grace periods and other alternatives to contain the mortgage due to the rise in the Euribor

Podemos

once again resorts to one of its flagship issues, housing, to take positions in this long electoral race in which the political parties seem to be embarking.

And it also resorts again to interventionism in the market as a way to try to alleviate the impact of inflation on the most vulnerable families.

In this context, the formation led by Ione Belarra proposes establishing a

variable-rate mortgages for families with fewer resources in the face of the Euribor escalation.

Financial sources have received the proposal with skepticism.

"No one in Europe is talking about this. The entities are already supervised by the European Central Bank (ECB) and, ultimately, it is a Competition issue," they say in conversation with

.

Podemos's approach is that banks compulsorily offer their clients the possibility of taking advantage of a reduction in their mortgage loans.

Thus, for one year the differential of variable-rate mortgages would be 0.10%, without an increase in the repayment term of the loan.

According to his calculations, the decrease in the monthly fee would pivot between 100 and 150 euros, at a time when the ECB's rate hike has driven the Euribor above 2%.

To apply the measure, the thresholds that were set during the pandemic to deploy mortgage and lease moratoriums would be taken as a reference.

Experts, however, do not believe that it is possible to intervene so easily in the market, nor that this is the solution at a time of economic uncertainty such as the current one.

"It is a counterproductive measure that generates legal insecurity as it involves a retroactive and therefore unfair modification of freely agreed conditions," says

.

General Director of the Institute of Economic Studies (IEE).

"This type of proposal generates regulatory risk with the consequent increase in the cost of capital, which will have the perverse effect of increasing the cost and limiting the availability of mortgage credit in the future. To help groups at risk of financial vulnerability, there are more alternatives justified and less distorting with free enterprise than price controls," adds Izquierdo.

change of conditions

From the mortgage intermediary firm Hipoo they propose other alternatives that are already in force in the market and that allow saving, at least partially, the continued increases in mortgage payments.

The first and most common is to renegotiate the conditions of the mortgage that we already have contracted.

This change can be made in three different ways: by means of an agreement with the bank with which the mortgage is held (

), by transferring the loan to a different entity (

) or by contracting a new fixed mortgage to cancel the variable that is in effect.

"Negotiating a mortgage novation with your own bank, that is, a renegotiation of its conditions, can be considered an optimal exercise in order to facilitate key savings against the rise in the Euribor", points out

, director Business Development of Hipoo.

Everything indicates that the Euribor will continue to rise in the coming months due to the ECB's rate hikes.

Some analysts point to a level of 1.90% at the end of this year and 2.20% when 2023 ends. CaixaBank Research is more conservative and forecasts that this index will close 2022 at 1.48% and will reach 1.78% next year.

That is why from the HelpmyCash comparator they warn that

.

"At the moment, banks are raising their fixed rates because they prefer their clients to contract variable mortgages. There are still entities that offer competitive fixed interest rates of around 2%, but the longer it takes to make the change from variable to fixed rate, the less likely it will be to get an attractive interest", they add from the

Pause on fees

Another of the options that Zamora points to in order to protect mortgage payments from the rise in Euribor are

.

"This type of mortgage product is an add-on that can be negotiated with the bank that establishes that there may be a

," he explains.

This deficiency can be negotiated by pooling capital and interest or just capital.

Mortgages with a grace period can be very useful if the moment in which to apply said payment pause is chosen correctly.

For example, if a presumed high point of the Euribor is chosen, it can solve high fees due to the forecast made.

mortgage insurance

The third option is also the most complex and risky, which is why Hipoo always recommends approaching it with an expert and not hiring one if its operation is not properly understood.

It is about the

, which "despite being a risky product, can serve us to safeguard, in a certain way, the increases in the Euribor", Zamora points out.

Regarding this financial product, the expert states that "it

although my recommendation is to go to an expert due to the complexity of the product and the possible consequences of trade it wrong.

The operation of the mortgage

is as follows: in the event that interest rates rise above a certain level, no more mortgage installment would be paid due to the rise in interest,

.

This insurance premium is a link equivalent to home insurance or life insurance, and can be of great help in the event that the Euribor rises disproportionately as it did approximately 15 years ago, when it exceeded 5 %.

In any case, whether it is a mortgage

or a mortgage with a grace period, they should be negotiated

that is, during the prior negotiation process.

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