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HomeFINANCE“The role of an intermediary has never been more relevant”

“The role of an intermediary has never been more relevant”

You housing credit challenges in a context of inflation and interest rate hikes they set the tone for the discussion at the first Doctor Finanças Commercial Convention, at the Royal Óbidos Spa & Golf Resort. The debate was attended by several officials from the financial sector: (from left to right in the photo) Cláudio Santos, from Doutor Finanças, Sandra Dias (Novo Banco), Alberto Torres (BPI), Renata Carvalho (Bakinter) and Francisco Ferreira Lima (Caixa Geral de Depósitos).

at a time when Euribor rates are already on positive ground and the European Central Bank (ECB) has already announced that interest rates will go upquestions arise about the impact it will have on the home loan operation of the banks.

“For banks, rates go up to a certain level it’s not really negative. On the contrary,” says Sandra Dias, Director of Marketing and head of Banking Partnerships at Novo Banco. The official stresses that the current scenario will benefit banks as margins with mortgage loans will increase.

Furthermore, Sandra Dias admits that banking has been preparing itself over time. “Obviously we weren’t going to have negative rates our whole life. We have some memory. Preparing for this means that we have also started to get used to the market, whether of our own volition, or by obligation on the part of the regulator, that some conditions we cannot do”, says the Director of Marketing and head of Banking Partnerships at Novo Banco.

Francisco Ferreira Lima, Marketing Director External Networks and Credit Intermediation at Caixa Geral de Depósitos (CGD)also believes that inflation and interest rate hikes will not harm the home loan business. “Real estate prices will stabilize, spreads will stabilize. The cost of money will increase as interest rates rise. There is an adjustment, but the market is still on the table. The business [crédito habitação] Will continue”defends the head of CGD.

Also Cláudio Santos, chief commercial officer (CCO) of Doutor Finançasbelieves that growth will continue, pointing to another relevant factor: pressure of demand on supply. In addition, the CCO of fintech admits that we are going to attend a “quota fight” by the banks, which will also not slow down the mortgage loan operation.

How to prepare for the rise in interest rates on home loans?

This whole situation will impact the family budget, even so, Francisco Ferreira Lima believes that there will be no default with regard to housing credit.

Reinforcing this idea, Sandra Dias points to the savings rate of families. “The volume of deposits increased a lot during the pandemic period. we realize that families have a pillow”, he indicates, demonstrating that the Portuguese have been preparing for periods of greater instability.

in moments of greater financial uncertainty, it is important to review charges and make decisions. CGD’s Marketing Director for External Networks and Credit Intermediation points out that “the role of a credit intermediary has never been more relevant” to advise and help families make the “right decisions”.

Read also: Brief history of Euribor: Guide to understand what’s coming

Fixed rate to combat rising interest rates?

This rise in interest rates, and the fact that it is not known how far they can rise, is raising doubts for those who have a mortgage in progress, as well as those who want to buy a house through a mortgage. Given the current scenario, questions arise about the alternatives to Euribor rateswith fixed and mixed rates options to be considered.

On the one hand, the higher fixed rate guarantees the security of knowing how much the monthly installment will be until the end of the contract. Alberto Torres, National Director of Partnerships at Banco BPI, outlines the profile of a customer who should opt for a fixed rate. “If there is little room for budget overruns, if the effort rate is at the limit, the fixed rate is safer”, he says.

Thus, a customer who opts for a flat rate is, as a general rule, more risk averse, is at the threshold of its rate of effort, or gives more privilege to safety.

In the case of the mixed rate, this “freezes” the interest rate during an initial period and in the remaining period it becomes variable, thus subject to Euribor variations. Renata Carvalho, responsible for Bankinter’s Partnerships Area, points to the mixed rate as a safe option, since the period in which the interest rate is fixed concerns “eventually the time we think there will be the biggest escalation of interest rates, where the rise will be felt the most”.

Also read: Is it worth waiting for interest rates to go down to buy a house?

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