The acquisition of a home by young people is almost a mirage. There are two major insurmountable obstacles on the path that would lead them to achieve this goal: low wages and low savings capacity, which severely limits them when requesting financing to acquire a property where they can establish their own home. Thus, at the end of 2019, less than four out of every 10 Spaniards under the age of 30 lived in a home they owned or paid a mortgage, according to the Youth Emancipation Observatory of the Spanish Youth Council. However, despite the problems it suffers, this public is attractive to banks, since these, through mortgage loans, seek to attract new customers who stay for a very long period of time, until the complete extinction of the bank. debt. For this reason, some entities promote mortgages designed especially for young people.
As a general rule, the age limit to request them is set at 35 years. It is possible that, once this threshold has been exceeded, the bank will sell the client associated products – such as insurance, direct debit of payroll or subscription to a pension plan – in exchange for some type of added bonus, as long as the loan signature has been prior to this moment. “Although this type of client does not have large savings or is not in the best professional moment of his life, by contracting the mortgage the entity ensures a new client practically for life to obtain profitability”, explains the director of Mortgages of the iAhorro bank comparator, Simone Colombelli. For this reason, he adds, “it is common to see more links associated with the mortgage in these types of profiles, in some cases up to six.”
Disregarding the economic situation in which this public finds itself is impossible. “The entities must differentiate their product by focusing on the lower savings generated by young people and, therefore, the lower capacity to meet both the expenses related to the acquisition of the home and the previously available part of the financing”, says the president of the National Association of Real Estate Agents, Vicenç Hernández Reche. For this reason, “they offer the possibility of agreeing deficiencies in which only interest is paid, delaying the return of capital, loans with a repayment term of up to 40 years and, above all, financing that exceeds the usual maximum of 80 %, without the need for pre-existing savings of 30% of the cost of the operation ”, sums up Hernández. In fact, “among the entities that offer these loans, there are some that cover up to 95% of the value of the property, with very competitive interest rates,” emphasizes Colombelli, along the same lines. There are also cases in which certain commissions are suppressed, such as the opening or early repayment.
In return, to achieve interest rates that are not very high, the requirements will be more demanding. “Given the impossibility of proving certain employment seniority in many cases, professional and employment ties to certain sectors that can be considered more reliable, such as being a civil servant or working in new technologies, will be assessed,” says Hernández. Colombelli emphasizes that “it is also common to make use of the figure of the guarantee as an extra guarantee for the bank against a possible risk of non-payment of the mortgage installment.” In his opinion, an alternative to improve credit conditions would be “to put it in the name of several holders.”
A not very abundant offer
In any case, not all entities promote mortgage financing products expressly conceived for young clients. Most of them have “an offer that is personalized according to the applicant’s profile, regardless of their age,” says Hernández, who also attributes the shortage of mortgages for young people to other factors, such as “the process of concentration of financial entities that it has been taking place in Spain; the very deep real estate crisis suffered since 2008, which forced authorities and banks to adopt prudent criteria to mitigate delinquencies, which very directly affected both the financing percentages and the increased rigor in the criteria for solvency and loan repayment ; and the fact that, in a context of health emergency derived from the pandemic, youth employment suffered especially ”.
Even so, examples of products of this type on the market are not lacking. This is the case, among others, of Kutxabank, whose young mortgage has a nominal interest rate (TIN) of 1.45% in the first year and 0.79% plus Euribor from the second year until the holder reaches 35 years of age. , as long as you accept the linked products proposed by the entity. From that moment on, a TIN of 0.89% plus Euribor will be applied. The result will be an equivalent annual rate (APR, that is, an interest rate that also takes into account other expenses and commissions), equivalent to a variable 1.78%. This rate drops to 1.59% if the client does not subscribe to the linked products, but, in this case, from the second year on, they will have a TIN of 1.79% plus Euribor until they are 35 years old, and 1.89 % plus Euribor for the remaining time.
Another example that stands out from iAhorro is that of Caja Sur. This entity cuts the interest rate differential on its mortgage loan for young people by one tenth of a percentage point, until the user reaches 35 years of age. If you accept to discount the fee through the contracting of associated products, you will obtain a variable APR of 1.75%. If not, this will be 1.58%.