The Euribor consolidates its rise and anticipates more expensive mortgages in the face of the ECB's notices

The Euribor consolidates its rise and anticipates more expensive mortgages in the face of the ECB's notices


Building under construction in a neighborhood of Madrid. / EP

The increase in the index, half a point higher in a month, will raise the installments of current loans and worsen those of new mortgages

Jose Maria Waiter

Goodbye to the stage of cheap money that had been marking the economy for almost eight years. After several attempts, the Euribor has settled in positive in what is the highest reference since 2015: yesterday it shot up to 0.084%. The figure is still minimal, very close to 0%, but it implies an advance of 0.06 points more than on Thursday and a new daily maximum for more than six years.

In fact, the current differential of the Euribor compared to the historical minimum that it marked just four months ago, last December, has meant a change in trend. From closing at -0.51% at that time to now approaching the 0% average in April, with a week to go before the end of this month.

This movement reflects, or rather anticipates, the warnings issued by various members of the European Central Bank (ECB) in recent weeks. The last to do so was this Thursday its vice president, Luis de Guindos, who advocated that, if necessary, the restrictive monetary policy begin its journey better sooner than later. "Theoretically, everything is possible," replied the former Minister of Economy when asked about the possibility that the ECB undertakes its first interest rate hike in July. "From today's perspective, July is possible and later is also possible," he insisted.

The fees will rise on average this year between 170 and 350 euros to transfer the growth of the indicator

Just yesterday, the president of the institution, Christine Lagarde, pointed out for the first time and clearly the "great probability" that rates will rise before the end of the year. In any case, and pending that decision, she has also asked the members of the Governing Council to avoid expressing their opinions on monetary policy to the media at least a few days after each meeting, according to various sources. .

The positions of the different members of the European Central Bank differ from the decision adopted at the meeting on April 14, when the institution decided to accelerate the end of net debt purchases at the end of the third quarter, but without specifying when the increase in types.

The direct consequence of this new monetary policy that is yet to come will have its impact on mortgages. Or rather, in the installments of those credits that citizens will pay.

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.

More expensive receipts

In this way, with a rise in the index such as the current one, which has risen approximately half a percentage point in the last year, it can mean 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 mortgage and the differential that each citizen has committed to their bank, as well as the type of credit, whether it is fixed or variable.

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

Lagarde has admitted that there is a "high probability" that rates will rise before the end of the year

A first change is already noticeable in banks: the average rate at which entities granted mortgage loans in March was 1.513%, compared to 1.481% in February, according to data from the Bank of Spain.

In this way, it is once again above the 1.5% level, although it is still below the maximum level registered in the last 12 months, precisely in March 2021, when an average rate of 1.571% was observed.

Change in offers

Those who are going to get a mortgage in the coming months will also see changes in the mortgage market. The strength of fixed-rate home loans will foreseeably fade as interest rates rise.

The commercial strategy of the banking will begin to turn towards offers in variable mortgages, where the margin they obtain will be more attractive than until now, with the Euribor in negative. 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.



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