As seen on January 2012, banks are taking advantage of the beginning of the year to revise their price policies; unfortunately for the consumer, this has always been done upwards. In the last few hours, Ing Direct and Uno-e have increased the price of their mortgages considerably.
The orange bank has increased from Euribor+1,89% to 2,69% (for clients of the institution), and placing the prices for non clients at Euribor+3,49%.
Uno-e, the online bank of BBVA, has also increased the price of its mortgages, increasing the differential from 2,20% to 2,70%, a very similar level to Ing.
There have been no movements from other bank for the moment, such as openbank (differential of 2%) or ibanesto (2,24%), both subsidiaries of Banco de Santander, although most probably it will not take very long before they do it.
With these modifications, online banks are no longer the most competitive offer in the Spanish mortgage scenario, getting further away from the offers made by some banks through their net of offices (without mentioning the mortgage offers of their own properties). As usual, it is necessary to compare offers in depth, as some institutions establish limits as high as 4,50% or great entailments.
If we compare the Euribor of December 2012 (0,549%) and the one of the previous year (2,004%), we can see that the fall means a reduction of the reference interest rate by 1,455 percentage points, curiously very similar to the increase of differentials applied by these banks in this same period of time. In January 2012, Ing Direct was offering mortgages with a differential of 1,24%; we can therefore say that the new mortgage holder would pay exactly the same today as he was paying last year, even if the Euribor has dropped dramatically.
The problem for consumers is that the Euribor will most probably fluctuate upwards, having a negative impact on its periodical revisions, while differentials are fixed. This means we will have mortgages with worse conditions.
As an example, for a mortgage of 150.000 Euros at 30 years, an increase in the differential of 0,50% can mean an increase in the cost of approximately 485 Euros per year (it will depend on the fluctuation of the Euribor), which would mean paying 14.560 Euros more in total, nearly 10% of the total mortgage. If we make the calculation with an increase of 1,50%, it will mean around 1440 Euros more per year or more than 40.000 Euros at the end of the life of the mortgage.