The drop in interest rates increases the gap between rent and mortgage: almost 400 euros less per month

Housing issues, especially rental, in the city of Alicante are quite significant. With monthly rents around 1,270 euros, according to the real estate portal Fotocasa, paying rent can become an impossible challenge for many.

This is why many people are opting to buy a home instead of renting, particularly after the recent interest rate cuts. This is explained to TodoAlicante by Ricard Garriga, CEO and co-founder of the mortgage platform Trioteca, who indicates that the difference between monthly payments and rent can be as much as 400 euros.

Garriga cites an example of a fixed-rate mortgage at 2.35% TIN for an average home in Alicante, priced at 290,000 euros. The buyer would pay about 895 euros per month for the mortgage, while rent would soar to 1,274 euros, making the purchase a long-term profitable option.

According to the CEO of Trioteca, this substantial difference is due to two factors. The first is "the pressure in the rental market with regulatory policies aimed at improving access but in practice have reduced the housing stock, leading to a price increase," Garriga explains, also referring to the drop in fixed mortgage rates.

The executive explains that "the recent reduction in rates has made payments more affordable." With the forecast that they will continue to fall, Garriga assures that "this difference will likely increase, as rents continue to rise, while mortgage interest remains attractive."

The CEO of the platform emphasizes that many families "prefer to benefit from a lower monthly payment and future savings." Garriga believes that, given the increased interest in home buying, "the demand for mortgages should maintain these competitive rates in the short and medium term."

Like fixed-rate mortgages, variable ones are also more affordable than rent. However, Garriga highlights that "fixed-rate ones remain the preferred option for those seeking long-term stability, especially because they eliminate the risk of fluctuations in payments and provide predictability in expenses."

Mortgage signings have surged in recent months in Alicante. According to data from the National Institute of Statistics (INE), last July surpassed 2,000 grants for the second time in 2024, marking the highest figure of the year.

Despite the mortgage boom in Alicante, buyers still face the main hurdle of home buying: deposits. With an average price of 290,000 euros, the deposit usually ranges between 20% and 30% of the property's value, leaving "considerable" amounts from 58,000 euros to 87,000 euros.

Garriga notes that despite these obstacles, "there are financing options with a lower deposit, and entities supported by programs like ICO finance up to 90% of the property's value for certain profiles, facilitating access to home buying for more families."

Furthermore, he insists that regional governments "can play a significant role that they are currently avoiding, which is to eliminate the ITP tax, which is 10%, for certain families with access issues to housing." He cites Portugal as an example, which has eliminated it and has made "access to housing somewhat easier for society, especially the young."