We do not have a fixed interest rate mortgage in Spain with a fixed interest rate of 0% as in Denmark ... But we have 1%

 We do not have a fixed interest rate mortgage in Spain with a fixed interest rate of 0% as in Denmark ... But we have 1%

mortgage
Spain 


A few days ago, several Spanish media reported on Nordea Bank, a Danish bank that launched a residential loan with a fixed interest rate of 0%. Of course, there are people who wondered if a similar product could be awarded in Spain. In principle, given the characteristics of our market, this possibility is quite remote, although this does not mean that we cannot get very cheap mortgages at a fixed rate. In fact, there is a bank that offers interest of only 1%: BBVA.


BBVA offers a fixed mortgage of 1%

The product we refer to is called bbva fixed mortgage. This loan is designed to finance the purchase of a house, and has a starting interest of 1%, although this may be higher depending on how long the money is returned. In the following table we can see what its price depends on the period of consumption:


The condition of the type of attention

Up to 15 years from 1.00%

Up to 20 years from 1.20%

Up to 25 years starts from 1.30%

Up to 30 years from 1.45%

It must be said, yes, to get this interest, it is necessary to rent many banking products: direct payroll, home security and fire insurance. By contrast, the rate rises by up to one percentage point.


This fixed interest loan has no opening commission and finances up to 80% of the value of the first home (70% for a second stay). The repayment period can be up to 30 years.


Will 0% fixed mortgages reach Spain?

Given the terms of this loan, it is inevitable to ask why Spanish banks, such as Danish banks, do not dare to offer 0% interest. To understand this, you must first know how the Danish mortgage market works, which is quite different from our market.


In the Danish market, banks are likely to offer mortgages, group them in bonds (known as securitization) and sell them to investors. Therefore, what they earn from these products does not come from the applicable interest, but from the commissions of granting credit or selling it to third parties.


In Spain, on the contrary, the market is more traditional. Normally, much less stowed operations are made here, so our banks are introducing large amounts of money through interest on fixed and variable mortgages.


In this case, Spanish entities are unlikely to offer fixed rates at 0%, as this would mean giving up an important source of income. In addition, it must be remembered that our banks are currently experiencing serious profitability problems (hence the mergers that have been announced), so they need to make more profits from their financial products.


In any case, they can continue to reduce fixed-rate mortgage loans, something that has happened since the second quarter of 2020 (although it has not reached 0% interest). At present, they barely make money through their variable mortgages (Euribor is traded at historical lows), so they can continue to reduce their fixed mortgages, through which they get more interest, to encourage them to hire.