November Makes Fixed Rate Mortgages The Cheapest Ever

2021-01-27   |   by CusiGO

The mortgage market remains depressed. The first strong rebound of coronavirus, with a double-digit annual decline in each month from March to July 2020, left only one response in September, when it rose by 18%. Since then, there has been no continuity in the economic recovery, and home purchase loans have been in a state of stagnation. For example, in November, 28756 home mortgage loans were in place, down 2.4% from the same period in 2019. Although data released by the National Bureau of statistics on Wednesday also showed that monetary policy to curb the coronavirus was affecting credit prices: the fixed rate mortgage signed in November was the cheapest ever.

Specifically, statistics from the National Bureau of statistics show that the average interest rate of non floating rate loans is 2.77%. So far, the lowest point is 2.84% in September, lower than two months ago, which means a significant leap forward. For a while before the pandemic, fixed interest rates were low, but slow. This is another month in November 2019, with a record low loan of 2.99%, which is a significant achievement, as it managed to fall from 3%, but there was no continuity in the next few months. Before the coronavirus: every month since March 2020, non variable mortgages have been below the 3% threshold.

Overall, the average interest rate for November was 2.45%, taking into account all fixed and variable loans (which are slightly in the majority). That means they are not the cheapest mortgages in history. By September 2020, the average interest rate will be 2.44%. The reason is that although variable mortgages are cheaper than fixed mortgages, they show the uncertainty of an epidemic that is spreading, reaching 2.19% in the penultimate month of this year, higher than the lowest level in September (2.12%), and higher than the level in the summer or the months before the health crisis. It must be pointed out that statistics refer to the average interest rate of mortgage loans purchased in the first year: that is to say, it does not include phenomena such as variable loans, which usually start with fixed interest rates for several years and then turn to variable interest rates.

Back to the total market volume, the cumulative loans from January to November are 7% lower than in 2019, according to the National Bureau of statistics. It’s bad data for an industry that grew before the pandemic, but it’s not a disaster. For example, it is better able to withstand a 20% to 30% drop in house prices. This is related to the fact that the impact of the epidemic on purchases with investment characteristics (which are more likely to be paid in cash) is greater than on purchases that need to be purchased (i.e. for families who want to own or change their homes). If there is no major shock in December, home mortgage loans will reach the intermediate level between 2017 and 2018 in 2020. This is a retrogression, but relatively small in the face of the impact of the crisis on other sectors.

ANA य़ s l ó PEZ, head of communications at fotocasa, stressed that November brought “the largest number of mortgages signed during the pandemic.”. “In fact, the number of signed mortgages has been steadily increasing since the rating was removed, and we have exceeded 26000 signed mortgages per month for several months in a row,” Lopez said in an interview with the media. For idealist / head of mortgage Juan villen, the data released on Wednesday “further shows that the volume of mortgage transactions we observed in the second half of 2020 is recovering rather than rebounding, confirming that the market lacks enough strength to exceed the level of the first half. “Pandemic.”

In terms of borrowing capital, for example, these figures are almost the same as last year. In November, the total amount of housing loans was 3.93 billion euros, an increase of 3% over the same period in 2019. In cumulative terms (i.e. plus the first 11 months of 2020), this indicator is only 0.2% lower than the previous year. The average mortgage amount in November was EUR 136676, 5.5% higher than 12 months ago.

“This confirms the clear trend of standardization,” Ferran font said in an analysis. apartment Yeah. The expert believes that the data from the National Bureau of statistics shows that “the impact of the second wave (pandemic) on the industry has begun to overcome”, but he also warned that “in such an uncertain period, we must wait and see how the market can get rid of the second wave and accept the impact of the third wave, Wait for the vaccine to provide the necessary stability. ”

Finally, when you look at the whole mortgage market, not just the housing market, the numbers are less pleasant. In other words: compared with other real estate assets, houses are more resistant. In November, the total number of mortgaged real estate (including rural and urban houses) was 38974, down 7% from the penultimate month of the previous year. Borrowings fell by 3% to $5.592 billion. In the cumulative figures of the first 11 months of 2020, the affordability of total loans even exceeds that of housing (- 6.3%), but the capital stock is 5.5% lower than that of 2019. It highlights the bad behavior of rural real estate: 18% reduction in mortgage loans and 21% reduction in loan capital.