Usually, when we are negotiating a mortgage one of the indicators that is evaluated is the spread offered by the financial institution.
The spread is a percentage that is added to the reference interest rate, for example, the Euribor to 3 months, 6 months or 12 months. Basically, the spread includes the profit that the institution has, the risk of agreement of the customer profile and any costs that banks have, if they use funding from other financial institutions.
Interest rate = Reference Rate + Spread
Spread = Profit Rate + risk rate + costs
The risk rate depends on the customer’s profile. The greater the risk of the larger client is the spread. Some factors influencing the risk rate are for example the income of the banking client and the quality and amount of finance the proponent intends to hold.