The Euribor is the reference rate most used in constituting mortgages to variable interest, specifically in 88.9% of new contracts. These are the latest data provided by the National Statistics Institute (INE), in which it is revealed that the European benchmark is the favorite among Spanish users to formalize their mortgages. With respect to the change in interest rate conditions, it is also the one most linked to variable rate mortgages, both before the change (71.5%) and after (82.2%).
But this trend in the reference models may change during the year before the possibility it looks replaced by the Euribor Plus. Although not be implemented immediately, but must wait, predictably, a few months before landing in the domestic housing market. And all as a result of the decision of the European Commission to introduce a new benchmark to provide greater transparency to the operations carried out by users.
And there is no doubt, as they still remain many uncertainties about its implementation, if it will be cheaper for their users, what will happen to those who have contracted other reference, and of course, the exact date that definitely hit the interbank market. Not surprisingly, one of the reasons given by the Community authorities is to avoid unpleasant cases where rates were manipulated by some banks and negatively affecting much of consumers.
Your expenses will be formed by adding the differential bank
You must know that you have more options to link this operation to other benchmarks. Believe it or not there is life beyond the Euribor, and all of them are official and published by the Bank selected without any restriction if you think you will improve the conditions of the contract. But that if they are clearly minority as is clear from the latest official data as a whole do not represent more than 7% of the transactions executed in late 2014.
Do not forget that variable rate mortgages are revised based on these benchmarks, which are what ultimately determine the price of the mortgage. Although this assessment will not have to pay the customer, but will be established by adding the differential to apply the bank. And this is precisely the part of the operation where you can save more money in monthly installments, to collect the latest offers that are developing credit institutions, which offer the best proposals to 1.50%.
What kind of references you can link the mortgage?
Although, as already noted, the Euribor is still the kind of majority reference between individuals who choose to hire a credit for the purchase of your home, the fact remains that there are other visible references in the market, although few operations they intersect in contracts. All are official and regulated, although depending on the election expensive or can reduce the cost of your mortgage.
Are mainly the MIBOR (Madrid Interbank Offered Rate), an interbank rate applied in the capital market of Madrid and is only officer for operations contracted before 2000, and to some extent has been replaced by Euribor, with which keeps a very similar evolution in the interest applies. With the advent of the new century, its operations have virtually disappeared and only previously contracted loans are still linked to this reference.
Another linkage that support markets comes from the IRS (Interest Rate Swap), an alternative index you can also link the mortgage. Although -and keeping some similarity to the Euribor Plus- in this case reflects the evolution of interest rates to five years. To do this, it calculates the average of the futures market on the deadline. It reflects a more transparent interest rates that apply on your mortgage. This is its main contribution with respect to other contracts, but are also very few transactions formalized with this index.
And finally, another type of reference that you can access to finance your home is the IRPH entities (Benchmark Mortgage Loan), which is used by almost 8% of mortgages contracted in the Spanish state. Configured as the strongest European benchmark index above the previous models alternative. However, it is more expensive and generates greater problems in its execution to be based on a monthly average for all credit institutions.