Kutxabank, composed of two Basque banks BBK, Kutxa and Vital, has saved its fixed interest rate for its long-term mortgage loans, after “many years” of not offering this kind of method of payment, according to the bank, and coinciding with a moment of the historic minimum record rates. Yesterday the ECB did not surprise and maintained them at the 0.25% level in spite of the risk of deflation.
The Basque entity – ruling about 40% of the mortgage market in Euskadi – launched a new offer proposing a fixed nominal interest rate oscilating between 3,89% and 5,24% up to the maximum term of 20 years. The final rate will depend on the customer linkage with the bank and will be lower for the clients with direct payment and signed up for cards, insurances and pension scheme in Kutxabank. Formalisation fee will amount to 0.25% of the mortgage.
According to the bank, the return to the fixed interest rates in mortgages is to extend the product range offered and give the client sense of stability “who will always know the exact amount of the installment, which will not vary in accordance to the changes in interest rates, especially the ones dictated by Euribor.”
The Basque entity decided to switch from traditional TAE (Annual Percentage Rate) to TIN (Fixed Interest Rate) as since the beginning of the year all the banks are obliged to include in the rate the registry and insurance expenses.
Apart from the fixed interest mortgage, Kutxabank also released a mortgage modality called “A blank year” (“Un año en blanco”) which will help the clients acquiring their first home to avoid the first costs in the process, so that (…) they can spend the money on, e.g. furniture.”
The bank wishes to revive the property purchase market through these changes. During the recession, Kutxabank raised its mortgage payment rate in this sector in the Basque Country and has maintained it stable for 2013, with a minor rebound in December. (…).