Banco Santander suspends trading in fixed-rate housing loans

Banco Santander suspends trading in fixed-rate housing loans

Banco Santander has decided to suspend negotiations on new fixed-rate mortgages, or the option to switch to this rate, for customers who have a floating-rate loan.

The decision was made late last week when, according to CNN Portugal, the bank’s administration sent an internal note to agencies across the country.

Until SAPO24Santander confirmed the suspension of negotiations on fixed-rate mortgage loans, stating that such an offer is “inappropriate in the current macroeconomic environment, given the volatility of the Euribor rate and a prediction of behavior that appears to be holding up badly.” in the medium and long term”.

In addition, the fixed long-term interest rates existing in the financial markets are higher than the short Euribor, so opting for this regime would not benefit customers, as the benefits of the variable interest regime are lower compared to the fixed interest regime”, the bank justifies in answer to the questions asked.

On Tuesday, the Euribor rate, determined by the average of the rates at which a group of 57 banks in the eurozone are willing to lend money to each other on the interbank market, has risen three months since November 2011 to a new maximum and has fallen to six and 12 months. compared to Monday.

The six-month interest rate, which is most commonly used for housing loans in Portugal, which entered positive territory on June 6, fell to 2.106% on Tuesday.

The government is aware of the problem and is expected to submit a proposal this week to respond to the increase in housing effort. As the Secretary of State João Nuno Mendes has already explained, the package may include measures that may include refinancing the credit and concluding a new contract or extending the amortization period, offering the customer a specified period for, with financial resources to do so, return to the original deadline.

President of the Republic, together with the government, will guide an increase in mortgage payments

“The government has tried to respond to this through specific benefits. But it is a situation that will be watched, especially if the war lasts much longer. It will be carefully monitored,” assured Marcelo Rebelo de Sousa, on the sidelines of the ENIPSSA National Meeting – National Strategy for the Integration of Homeless People.

According to the head of state, the “war had of course financial consequences” and there is “an average for Portuguese home loans, which in many cases indicates an average increase in terms of between 15 and 24 months”. /25 %”.

“This is being analyzed by the bank and is being analyzed by the government to see if this is the case on average, what is outside the average and how the situation is in general and how it will develop in the coming period. It is a concern of the government and it is a concern of the financial system. It is a concern of the Portuguese,” he emphasized.

The implied interest rate on home loan contracts rose to 1.144% in September, 13.3 basis points more than in August (1.011%), according to the National Statistical Institute (INE).

For the financing of the purchase of housing, most relevant in home loans, the implicit interest rate for the total number of contracts rose to 1.160%, 13.3 basis points (bp) more than in August, while for the contracts concluded in the last three months were closed, yields rose by 24.7 bps compared to the previous month, representing 1.775%.

For all contracts, the average term value increased by four euros to 272 euros, of which 58 euros (21%) correspond to interest payments and 214 euros (79%) to amortized capital.

The prime minister on Monday believed that the effect of the rise in interest rates on housing loans is controlled by the government and should be addressed without drama, but called for caution in the European Central Bank’s (ECB) action.

“We have closely monitored the evolution of credit with the Bank of Portugal and the Portuguese Bankers’ Association and the state budget for 2023 has a specific measure that increases the liquidity of households holding home loans in assets, as these households can require the reduction of one step in the IRS withholding tax,” he replied.

According to the Prime Minister, there was also a clear desire among banks to “find the best ways to mitigate the impact of the rise in interest rates through negotiations with customers”, saying that as early as the pandemic period, there was tension around this housing loan issue and the issue was also “overcome” through negotiations.

According to the executive branch, the policy of “normalization” of interest rates by the ECB will point to a long-term stabilization of reference rates at around two percent.

“It is not desirable for interest rates to rise so much [até aos 3%] and the ECB must be very careful in raising interest rates to contain inflation. We understand that this inflation is less the result of having a large amount of money in circulation (and a large influx of people’s incomes) and more of an imported and well-known cause, namely the Russian war against Ukraine – a war that worsened in the supply chains and introduced the added fact of an energy crisis,” he emphasized.

In other words, for António Costa, “it is not rising interest rates that fight inflation”.

“We must maintain this evolution without a situation of social crisis or loss of housing, because the right to housing is a fundamental right of families and it must be guaranteed and protected,” he added.

*Article updated at 8:08 PM