The impact of the installment on a family's income on average decreases by half of the initial one for a 20-year mortgage. This is what emerges from a study by the Abbey National Bank Observatory - Catholic University. The analysis examines the evolution of the income of different family types classified according to expenditure and monthly income.
As regards fixed rate mortgages, the following types of families were examined: 1) couple with two children with a salary growth rate of 2.75% per year and an income, at the time of signing the fixed rate mortgage contract, 10% higher than the family's monthly expenditure (the monthly mortgage payment is equal to 750 euros); 2) couple with 2 children with a salary growth rate of 3.5% and an income 10% higher than the family's monthly expenditure (monthly mortgage payment equal to 750 euros); 3) single under 35 years of age and a salary growth rate of 2% and an income, at the time of signing, 50% higher than the current monthly expense (monthly mortgage payment of 500 euros); 4) single under 35 years of age and a salary growth rate of 3.5% and an income at the time of signing that is 50% higher than the current monthly expense (monthly mortgage payment of 500 euros). For fixed rate mortgages in the first case at the end of the mortgage period the incidence of the installment is equal to approximately 15% of the monthly income, therefore 10 percentage points less than the incidence at the time of stipulation of the mortgage. In the second case it drops to 12.7% of income, 12 percentage points less than the initial one. In the third case considered the incidence goes from 20% initially to 13% at the end of 20 years. In the last case the final incidence is 10%, less than half of the initial one.
source: Real Estate Observatory
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