Kirsty Mckenzie
MORTGAGE repayments in Spain won’t go up for a decade, according to one of Spain’s leading bankers.
CEO of Caixabank Gonzalo Cortazar said the Euribor rate – which currently stands at a historic low of -0.468% – will be the ‘new normal’ for banks until 2031.
Euribor, which is the interest rate at which credit institutions lend money to each other, has not stopped falling since the coronavirus pandemic began.
The negative rates mean the cost of repayments on variable mortgages have plummeted in the last few months, with some homeowners even seeing reductions of up to €120 on the price of their loans for next year.
Now Spanish analysts have revealed they foresee banks gearing up to offer steep discounts on fixed mortgages to pull in customers.
Forecasters predict that lenders will be forced to slash rates on fixed deals to steer people away from variable rates. Meanwhile some banks may insert clauses saying interest payments will never fall below zero.
And while this is all good news for homeowners or prospective buyers, these negative rates are putting pressure on the banking sector and add to other foreseeable consequences of the coronavirus crisis in Spain.
Cortazar has pointed out that with this situation and with the prospects that non-performing loans will rise during 2021, banks have no choice but to find ways to improve income and accelerate efficiency.
He highlighted plans to merge CaixaBank with Bankia in order to weather the storm.
“Until then, customers will not perceive that there is a single entity,” he said.
