Friday, October 7

The Euribor is rising. This is what we know about its alleged manipulation by the banks


Interest rates are going up. And therefore does the Euribor, the index to which most mortgages in Spain are referenced. And so we have spent a year in which variable-rate mortgages have become much more expensive, since the Euribor has gone from -0.5% to almost 1%. However, there have been and are accusations that this index is manipulated so that the banks can make extra profits.

Are we, therefore, facing a great scam? Are the mortgaged paying more than their fair share?

What is the Euribor. The Euribor is the interest rate at which banks in the euro zone lend money. It is calculated daily and there is a Euribor at one week, one month, three months, six months and one year, depending on the length of the interbank loan. The one used as a reference in mortgages is the monthly average of the 12-month Euribor. That is to say, all the daily data of the 12-month Euribor are taken, the average is made and that is the data for the month in question, which the banks use as a reference for mortgages.

Why is there talk of manipulation?. Although the calculation of the Euribor seems very simple, in reality it is not so much. Not every day there are enough relevant interbank loans, so, in its day, calculating it based on them was considered too tedious a process. Thus, it was decided to ask a panel of banks at what interest rates the loans between them would be made. That is, a survey.

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At the time, this gave rise to manipulations that the European Commission investigated in 2011 and that concluded with the sanction of JP Morgan, Crédit Agricole and HSBC.

The euro is already worth the same as the dollar.  And that has huge implications for the price of the technology.

What changes have been introduced. Apart from these sanctions, changes were introduced in the calculation of the Euribor that came into force in 2020. These changes meant that, today, the calculation of the Euribor does take into account the real loans between banks. And only if there are not enough transactions, then the survey would be carried out, but always supervised and with justifications. The new process is quite complicated but above all it is highly supervised and monitored so that the abuses of the past are not commented on.

interest rates. In summary: in the past there were manipulations of the Euribor, but today they are much less likely. The reason why the Euribor has grown so much in recent months is due to the rise in interest rates and the tightening of the monetary measures implemented by the European Central Bank. That is, policies aimed at controlling inflation. There are no conspiracies.

How far will the Euribor go? If in the month of July the Euribor almost touched 1%, in August it will be far exceeded, at the moment the average for the month is 1.16% and the latest daily figure is 1.48%. In addition, there are prospects that interest rates (currently at 0.5%) will rise to 1% in August and may have another rise in October, so it would not be unusual to see a Euribor around 2 % during this fall.

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