Variable rate mortgage: it costs up to 80 euros more than the fixed one, the price increases and the choices to be made
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The oddities of the market
There is an average difference of 82 cents between a 20-year fixed-rate mortgage of 140,000 euros and a variable-rate mortgage with the same amount and duration; the same comparison made on the thirtieth year shows a gap of 95 cents. The unprecedented fact is that it is the fixed loan that costs significantly less and not, as is the rule and as would be logical, the indexed one.
In terms of installments, calculating the effective rates, at 20 years with the fixed rate you pay 842 euros per month, with the variable 903, i.e. 61 more. In the thirty-year period, the installment gap rises to 79 euros which divides the 656 of the fixed from the 735 of the variable. And this is not the only “oddity” of the market: contrary to what historical data and common sense would suggest, fixed mortgages have decreasing rates as the duration lengthens, thus following in the footsteps of Eurirs, the reference parameter for this type of financing, which has a maximum value for one year and then decreases as the maturities increase.
Read also:
– Mortgages, the map of increases and offers: how to get out of the variable rate trap
Jul 17, 2023
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