In spite of the difficulties we are going through due to the pandemic, the mortgage market is being more flexible by offering new products for the purchase of a house. It is true that the last term of the year is usually not the most favourable one to invest on property. Nonetheless, we are living an absolutely atypical moment that cannot be compared to any other. The last term of 2020 which is about to end, must be considered an exceptional case; the coronavirus has changed everything and even though, unfortunately, many businesses have succumbed, opportunities for investors have arisen. Some weeks ago we wrote an article about investors who make a bet on purchasing property in pandemic times. What drives them to make this decision? Why do they decide to buy a house in these uncertain times we are living through? In this blog we also wrote an article about housing awaiting further investments, and we stated that many analysts expect more activity in the real estate sector as of the arrival of autumn. It seems that this movement is starting. Among other factors, this is due to the fact that the world of mortgages has changed in the last months, and at present, there are opportunities that did not exist before.

NEW FINANCIAL PRODUCTS

Currently, one of the main attractions for homebuyers is the low-interest rates in the world of mortgages. The Euribor continues at historical minimum (having registered three consecutive historical minimums), and this has led to mortgages with low interest rates not only on variable products but also on fixed-rate mortgages. Financial entities try to alleviate the negative effects due to the drop of variable rate mortgages. Hence, they have improved the conditions of their fixed-rate products so as to encourage investors to apply for this kind of mortgage. Interest rates have dropped considerably on fixed-rate mortgages and this is originating mortgage contracts by investors. On the other hand, we know that due to the health crisis housing is moderating its prices. In addition, there has been a decline in the number of operations and, therefore, financial entities try to reactivate the market by improving their offers as well as by launching new products. This last term of the year is a very important one because it can improve the final balance in spite of the adverse circumstances we are living through. The banks are well aware of this. This is why they facilitate mortgage contracts with products that were not available in the market a few months ago.

VARIABLE OR FIXED-RATE MORTGAGE?

The fact of choosing between a variable or a fixed-rate mortgage depends on the circumstances of the homebuyer. If the homebuyer has no problem with a rise in interest rates, then it would be interesting for him to take out a variable mortgage, especially if he/she has enough economic resources to pay off part of the mortgage during its first years. On the other hand, if the homebuyer wants to maintain steady quotas because he/she does not need to pay off the mortgage as soon as possible then the fixed-rate mortgage would be the most convenient one. So far, the Instituto Nacional de Estadística emphasizes the predominance of variable mortgages during this year. However, the emergence of fixed-rate products has boosted their contracting.