The Euribor has returned to being positive after six years in negative. /
Economy of TODAY
Last year, mortgage loans for the purchase of homes worth 646,000 million euros were granted in Extremadura, the highest figure since 2011
The Euribor has turned positive again. Six years after it entered negative territory, back in 2016, yesterday it placed its daily rate at 0.005%. Although the monthly average of the indicator continues to be negative (-0.057%), it is increasingly closer to zero and anticipates a tightening of mortgage loan conditions.
Or what is the same: everything indicates that mortgage interest rates are going to start to rise. The reason behind the rise in the Euribor is, for now, the expectations created, because the European Central Bank (ECB) has not yet made any decision about interest rates. However, it is already expected that the historical inflation that is being experienced in Europe will be combated through a contractionary monetary policy. That is, raising the interest rates at which it lends money to national banks and reducing the amount of those loans.
In this way, financial institutions will respond by also raising the interest rates they offer to customers to maintain their profitability.
63% of mortgages last year were signed at a fixed rate, when a decade ago they were barely 5%
This rise in rates may mean, on the one hand, that families think twice before buying a home and, on the other, that Extremadurans once again bet on variable-rate mortgages due to the tightening of conditions that families will experience. fixed type.
The granting of mortgage loans for the purchase of homes reached its highest figure in the last decade at the end of 2021 in Extremadura. The home buying and selling market is experiencing a period of clear expansion.
The total amount of mortgage loans in the region was close to 643,300 million euros, the highest since 2011. There were 7,586 mortgages for homes signed in the provinces of Extremadura, 1.8% of the national volume. Regarding the amount, its weight was lower, 1.12%, which indicates that mortgages in Extremadura are lower than the national average, which is explained by the lower price of housing.
Terms
If the rise in interest rates is confirmed, conditions like the current ones will no longer be seen. Banking entities are granting fixed-rate mortgages with interest ranging between 1.40% and rates below the point. Larger loans can get lower rates.
They are very attractive offers, which have caused Extremadurans to opt for fixed rates instead of variable rates in recent years. National data shows that 63% of home mortgages signed in 2021 were fixed rate. A decade ago, variable rates accounted for 95%.
Currently, variable rate mortgages are around 1% plus the Euribor. As, for the moment, its monthly rate is still negative, installments continue to be paid with interest below that 1%. The question is how long it will continue to be so.
In any case, with the tightening of European monetary policy, mortgage interest rates will rise, both variable and fixed, and customers will face worse conditions when signing their mortgage loans.
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Eddie is an Australian news reporter with over 9 years in the industry and has published on Forbes and tech crunch.