Author Archives: Ken Myers

The spread of fixed rate and variable rate mortgages

The mortgage spread is the difference between the reference rate for that loan and the rate actually paid to the borrower by the bank. In fact, it is the bank’s profit: the mortgage is structured like any other loan, thus providing for the granting of a loan amount against a repayment schedule in installments and the recognition of a certain interest rate . Obviously, the mortgage then provides for particularities, such as the institution of the mortgage (even if traditional loans also require certain guarantees).

The interests are therefore a fundamental component in the disbursement of a mortgage

The spread is a concept that in recent years has found much space in the media and is now better known by many Italians. Even if it was not a question of mortgage rates, the much publicized spread worked in the same way: it was always the difference between a reference rate (in that case the German ten-year government bond) and the one paid by the Italian State (on BTPs, a type of government title). In the same way, the borrower finds himself paying a difference between a rate conventionally chosen by the banks and that actually provided for by the contract.

This difference remains fixed for the entire duration of the loan

This difference remains fixed for the entire duration of the loan

Regardless of the type of interest rate chosen by the consumer, the profit required by the bank will always remain the same. We must not confuse this forecast with the difference between the fixed and the variable rate: in the first case, the rate remains fixed on all mortgage payments, while in the second it changes according to the trend of a given reference rate (such as the EURIBOR or the ECB rate). However, the spread established at the beginning of the contract will always remain the same: if the rate is fixed, then the interest to be paid will also remain the same, while if the rate is variable the changes will follow, but always with the same spread.

Simplifying this concept, assuming a blocked spread, a fixed rate would always be calculable as Eurirs rate (the one used for these calculations) + spread: the result will always be the same for the entire duration of the loan, because the Eurirs remains fixed. On the contrary, for a variable rate loan, the calculation to be made is Euribor (or ECB rate) + spread , with the result that will vary depending on the reference rate fluctuations. To find out anyway the amount of the mortgage spread requested by the main Italian banks, connect to this portal.

How to Take a Cheap Payday Loan

It should start with realizing that such financial products also have advantages, because long ago the monopoly time in this market has passed and the huge costs have been overstated. So how do these qualities look like? First of all, it’s immediately available when you need them, most often online. Therefore, we do not have to wait for a decision and to collect documents about earnings. In addition, competition on the non-bank loan market.meant that payday loans had to become attractive to customers. As a result, many companies offer the first free loan, conditioned only by timely repayment. What’s more, thanks to the Internet we have the opportunity to compare many offers and choose the most advantageous one. Maybe this is not an advantage of the same payday, but it certainly is associated with the development of competition on the non-bank loan market.

The first loan for free?

The first loan for free?

It must be a cheap marketing gimmick, because in these times there is nothing for free. Probably many of you have thought, however, the first loan in a given company is usually free, and the condition that must be met to not incur any additional costs is only its timely repayment.

Important !!

When deciding on a free reminder, it should be remembered that it is free only on condition of timely repayment and when the APR is 0% (few companies offer a zero interest payday, however, this does not mean no fees as several components contribute to the cost of the loan). Extending the deadline or delay is associated with high fees. However, if we are sure that we will pay the payday in time, nothing prevents her from taking it.

What are the costs of subsequent loans?

What are the costs of subsequent loans?

As I mentioned earlier, thanks to the Internet, we have the opportunity to compare the cost of loans in many companies, which only takes a moment. Thanks to the use of the instant comparison website, we can choose the cheapest offer, and the difference in costs can be really big. For example, Vivus has the cheapest payday with the ability to take them online. In this company, for borrowing PLN 500 for 30 days with another loan to be repaid, we will have a total of PLN 578.50, so the total cost of the loan is only PLN 78.50. In the most expensive companies, the cost of a loan with the same parameters reaches even PLN 130-140.

The possibility of withdrawal within 14 days

The possibility of withdrawal within 14 days

Few customers know that a non-bank loan agreement, like a loan agreement with a bank, has the option of resigning within 14 days. If the decision on resignation is made within 14 days of taking the loan, then the client does not bear any consequences. Moreover, it is not required to give the lender a reason to withdraw from the loan agreement. It is only necessary to provide (via e-mail or traditional mail) an appropriate statement (its pattern is most often sent to the customer when it concludes a contract). Withdrawal from the payday agreement within 14 days is a very beneficial solution in financial terms. According to the law, the client has 30 days to return the amount borrowed together with interest charged for the period from the date of payment of the payday to the day of its return. However, this “cost” is incomparably smaller than the standard commission and other fees.

Spread in real time: what it is and how it affects funding

The real-time spread is a service offered by many websites, where you can monitor the progress of this important measure of the cost of state financing . To be able to make the best use of these tools, it is however necessary to understand how the spread works, since it has become a concept widely used in public debate, sometimes with many inaccuracies. The spread, depending on convenience, is used to scare consumers or, on the contrary, reduces its importance, stating that it only concerns the financial markets. Let us try to make this concept clearer.

Spread means the difference in the interest rate between a financial security and another , considered particularly reliable

interest rate

In the case of the spread that we often hear about, it indicates the difference in the rate of the Italian BTP , a 10-year government bond, and another state security deemed safe, called the benchmark : the spread, in most of the cases, refers to the German Bund , ie the 10-year government bond of Germany. The difference between the Bund and BTP therefore constitutes the spread: how to read this data? If, for example, the spread is at 200, it means that the difference between the rates of the two securities is 2%.

The Bund is chosen because it is considered a particularly stable and secure security


When the spread goes up a lot, above 250 points for example, it means that the Italian state is paying a lot more to finance its activities and repay its debts. These seem very distant concepts from the daily life of citizens, but in reality when the State has to pay its debt a lot, it can allocate much less resources to essential functions such as welfare . Thus, a high spread is not good news even for ordinary citizens.

However, it is good to consider this measure with caution, which can also depend on turbulence on financial markets that have little to do with the actual performance of the Italian economy. In general, even if there is no precise rule, one can say that the markets and the spread punish instability , that is when we see the risk that the State is in difficulty to respect its economic and financial commitments. Finally, we must not forget that the spread, together with some reference rates, helps to establish the cost of variable rate mortgages.

However, to stay informed about these dynamics, you can connect to an online tool like the one prepared by Il Sole 24 Ore, to keep you informed about the spread in real time. The online tool allows first of all to display the current value of the spread , or rather the one at the last update, which is now reported on the same page. Furthermore, the percentage change compared to the previous update is also available. Finally, it is also possible to study the trend of this index during the day which, thanks also to an easy to understand graph, also indicates the maximum and minimum values ‚Äč‚Äčtouched in that period of time.