The government will lower rates for mortgages up

The government aims to introduce more competition and promote information about the mortgage market. The Council of Ministers approved on Friday a package of measures to improve the functioning of the mortgage market, with a lowering of costs associated with the purchase of housing. The government also adopted measures to liberalize energy and aspects of budget management, advanced yesterday as the vice president and minister of Economy and Finance Pedro Solbes, the Spanish Congress of Deputies.

The anticipated increases in interest rates that will occur in Europe pose risks for those who have signed up for variable rate mortgages. The increase will be "good from the standpoint of moderation in domestic demand and construction, but bad for those who have opted for variable-rate mortgages," said Solbes. With the objective of promoting fixed rate mortgages, or mixed (part fixed and variable), the Council of Ministers will adopt measures to ensure that the consumer who decides to move its variable mortgage rate is lower mixed penalty.

At present, 99% of new mortgages are governed by a fixed rate. Of the total mortgage market, this modality represents 85%. Economics aims to improve the information received by consumers. To do so will require institutions to report cases of rate hikes, with simulations of how the customer would pay if rates increase.

Home purchase

It also created new fees levied on certain transactions, including the purchase of housing. The idea is to set rates (for example, of notaries) more proportional to each transaction, which is expected to mean that the amount paid to increase the higher the price of the property. At present, to buy a house, the citizen must face a series of extra expenses (scriptures, subrogation of a mortgage ...) which can represent up to 10% of the value of housing.

The mortgage market measures contained in the plan to revitalize the economy adopted by the government in February last year. These developments have not yet been translated into a standard, so the Council of Ministers will resume this week.

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Written by Carlos Lopez on March 30, 2006 with 0 comments.