Fixed mortgages still a safe bet

Fixed interest rates for mortgages remain attractive to borrowers, who see them as insurance against the increased uncertainty of still-rising inflation and floating rates.

The prevailing economic conditions make many households nervous and impact their decision to buy a new house, bank managers say. But locking in the rate with a fixed rate mortgage is still a viable and beneficial option for those who decide to take the plunge and take out a mortgage, without the anxiety that floating rates induce at present.

Households repaying old mortgages, whether fixed or floating rate, and who were diligent with their repayments are also protected from the ravages of inflation, the managers say. For many mortgages close to maturity, payments are mostly about the principal and not the rate.

And rates are still expected to rise: A reliable gauge are the European Central Bank’s interbank rates. The 3-month Euribor, which serves as the benchmark for about 90% of the banks’ housing loan portfolio, stands at 0.351%. The 12-month Euribor, which reflects near-term expectations, is at 1.146%, meaning an expectation of rising rates. It is no secret that the ECB has decided to raise rates again in September, after July inflation in the eurozone rose to 8.9% and 11.3% in Greece.

At present, fixed-rate mortgages are bucking the trend in floating rates: They range from 2.90% for a three-year mortgage to 4.20% for a 30-year one.

Eurobank offers rates of 2.90% for three-year loans, 3.10% for five years, 3.50% for 10 years, 3.70% for 15 years, 3.90% for 20 years, 4% for 25 years and 4.20% for 30 years.

National Bank loan rates also vary by the size of the loan: 3.30%-3.70% for 10 years, 3.55%-3.95% for 15 years, 3.80%-4.10% for 20 years, 3.95%-4.25% for 25 years and 4.10% to 4.40% for 30 years.

Alpha Bank loans vary only by duration: 3.20% for five years, 3.40% for 10, 3.60% for 15, 3.80% for 20, 4% for 25 and 4.20% for 30 years. Rates increase by 0.20% in the cases where the mortgage finances over 60% of the property’s estimated value.

Piraeus Bank’s fixed rates range from 3.35%-4% for 3-30 year loans, while its floating rates are pegged to the 1-month Euribor, still marginally negative, plus a margin of 2.65%-3.75%.