Tuesday, February 27

The Euribor is positive for the first time since 2016 and raises mortgage payments

It closes April at 0.013%, half a point above the level it had at the beginning of the year, given the ECB’s warnings to raise rates due to inflation

Jose Maria Waiter

Interest rates have fired six consecutive years at a minimum to enter a field almost forgotten by many mortgaged families: that of the Euribor on the rise and, what is more novel, in positive. For the first time since February 2016, the most widely used indicator to calculate housing loan installments has closed a month above 0%. Of course, they are barely a few hundredths because the index ends April at 0.013%.

In the end, it has closed well above the March reference, when it was at -0.237%, and already far from the -0.50% of December. The rise in the index has involved advancing half a percentage point in just four months. It was on April 12 when it was positive in the daily rate (0.005%). Since then it has been going up.

As minimal as it may seem, the April figure reveals a new economic and financial reality. Economic, because it predictably anticipates the decision that the European Central Bank (ECB) has been digesting on the need to raise official interest rates to deal with the rise in prices and volatile inflation. The Euribor has become the thermometer that best anticipates this new stage that would come from the summer.

The consequences of this new reference of the index above 0% have much more depth in the day to day of families. A rise in the index like the current one, which has meant approximately half a percentage point more in the last year, can cause an increase in mortgage payments that would be between 170 and 350 euros per year. That is, between 14 and 29 euros per month. The final amount will always depend on the review schedule of each loan and the differential that each citizen has committed to their bank, as well as the type of credit, that is, whether it is fixed or variable.

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The latest data available in the statistics of the Spanish Mortgage Association (AHE) indicate that the outstanding balance (all mortgages in force) of loans linked to the Euribor amounts to approximately 455,500 million euros.

Although fixed-rate mortgages have been gaining more followers in recent years, variable rates represent the majority. Of course, the new ones that are being constituted were much more inclined to fixed quotas. Specifically, 70% of those signed are fixed and 30% variable.

In addition, those who are going to get a mortgage in the coming months will also see changes in the banking market. The strength of fixed-rate home loans will foreseeably fade as interest rates rise. The commercial strategy of the bank will begin to turn towards offers in variable mortgages, where the margin they obtain will be more attractive than until now with the negative Euribor. On the contrary, the new fixed rates will increase as the cost of long-term debt has been growing, the reference of the entities to set the price of the mortgages they sell.

34,000 claims

On the other hand, the deputy governor of the Bank of Spain, Margarita Delgado, indicated this Friday that the institution has received 34,000 claims in 2021, 55% more than in the previous year. “This figure is a good example of how citizens continue to frequently resort to this way of resolving their disputes” with banks, she said.


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