Anyone who has a mortgage has probably gone – physically or virtually – to other banks to check whether by changing entity they can obtain a lower interest rate than what they currently pay. The process is common and has been practiced for years: the bank is interested in attracting a new customer with a loan that will tie him down for decades, and the borrower can save a good amount of money in interest.
Traditionally this change occurs through subrogation, a mechanism that allows a mortgage to be transferred from one bank to another. But in recent months financial institutions are limiting this path. The bank’s preferred strategy is for the customer to cancel the current mortgage and sign a new one with the institution that offers better conditions. For the bank it means reducing costs; For the customer, assume greater expenses.
With subrogation the receiving bank bears most of the formalization costs. When opening a new mortgage, however, the customer must face some additional expenses, such as the evaluation of the house or the cancellation of the registration of the old mortgage. Additionally, the contract may provide for a penalty for early termination, although this is limited by law. The practical consequence is that many mortgage holders are pressured to cancel their mortgage and apply for a new one to get a better interest rate.
“It is more expensive for the customer to cancel and take out a new mortgage than to do a subrogation, since he has to bear more expenses and commissions (cancellation of registration, notary, registration, management, evaluation). Although most banks have mortgage subrogation simulators in their digital channels, in practice, canceling and taking out a new loan may be the only possible option to obtain a real improvement in the interest rate and conditions,” explains Gabriel Rodríguez Lorenzo, co-founder of the financial comparator. SinCommisiones.
Sources from four banks confirm that this is a widespread practice in the sector, driven both by cost savings and the possibility of speeding up the process, since subrogation usually involves additional procedures that lengthen the time. The data supports this trend: according to the National Institute of Statistics (INE), in the first six months of 2025 around 4,700 surrogacies were registered, practically half (-48%) of the over 9,000 carried out in the same period of 2024.
“Subrogation limits the room for maneuver of the new entity, since it has to take on an inherited contract with already agreed conditions. On the other hand, in the event of cancellation and taking out a new mortgage, the new entity can apply its current policy and connect the customer with new products, which affects the profitability and loyalty of the new customer,” adds Rodríguez Lorenzo.
Margins at the limit
The market environment plays an important role. Spanish banks currently offer the second cheapest mortgage prices in the eurozone, which leaves very tight margins and very strong competition in this business segment. According to the latest data from the European Central Bank (ECB), the average interest rate on mortgages granted in Spain in August was 2.68%, significantly lower than the Eurozone average of 3.3%. This means that it is cheaper for customers to get loans in Spain, but for banks the margins are narrowing. Bankinter CEO Gloria Ortiz assured this week that mortgage competition is becoming “a little irrational.”
Therefore, to offer competitive and advantageous conditions, institutions have found a way to slightly reduce the costs associated with subrogation, transferring part of them to the customer if he chooses to open a new mortgage. As explained by the same sources, it is a process in which both win: the bank saves costs, time and procedures in the administrative process and the customer gets a lower price than what he is paying.
In fact, they underline that the banks’ preference for customers to cancel the mortgage and take out a new one is also due to a way to speed up the process. Subrogation is slower and more administratively cumbersome because the originating and destination banks must exchange documents. In many cases, it can take several months to complete, while opening a new mortgage allows you to accelerate the terms, which is particularly valuable in a context where interest rates can change rapidly in line with the Euribor.
It is also underlined that in the case of subrogation the originating bank has the right to make a counter-offer. The procedure involves sending a binding offer, allowing the home bank to study it and decide whether to adapt or improve it. The legal period is 15 calendar days. The decision to stay or move to another entity is up to the customer. But during this period you will continue to pay the usual rate and, if the Euribor changes, the new bank’s initial offer may not be updated, forcing you to start the process again.
“The difference is that subrogation is usually cheaper in terms of expenses, but limited because you depend on the originating bank. Canceling and opening a new mortgage involves some additional costs, such as canceling the registration, but in exchange it gives you total freedom to choose the bank and the conditions. In many cases, what you save in interest more than offsets that initial expense,” explains Jorge González-Iglesias, CEO of the financial consultancy platform Gibobs.
The expert explains that so that the customer does not lose out with the change, before making a subrogation or canceling and opening a new mortgage, it is important to request a binding offer from the new bank and to have clarity on medium and long-term savings accounts. “To really improve current conditions, in addition to obtaining a lower interest rate, it is also interesting to reduce the monthly payment, shorten the duration or eliminate unnecessary commissions,” he adds.
Since 2019, surrogacy has become a key mechanism. In the same year the new mortgage law came into force, which aimed to increase competition between banks and make it easier for consumers to improve their conditions without incurring excessive costs. Inspired by the idea of mortgage portability, the rule was intended to make it easier to change entities when another offered a more favorable interest rate. It also sought to establish a more equitable distribution of mortgage costs, strengthen transparency in contracts and protect the consumer from unfair terms.
