The state of the economy continues to put additional pressure on personal finances. Euribor will close July at 0.997%, the highest value in the last decade and well above the rate with which it closed in June, at 0.852%. An increase in the cost of mortgages which will force Spanish households on average to 100 euros more per monthOr what amounts to the same, 1,200 euros more per yearaccording to experts from HelpMyCash.
The rise in inflation in Spain promises future increases. Euribor will continue to rise in the coming months, boosted by the rate hike from the European Central Bank – which raised the price of silver to 0.5% on July 21 – and the further hike expected for September . Terrible news for anyone with a variable mortgage. Your payments will become significantly more expensive if your interest is revised in the coming months.
How do I know if the rise in Euribor affects me?
Interest on variable mortgages is usually reset once every six or 12 months from the date the loan was taken out. When the day indicated in the deed arrives, the bank takes the last value recorded by the Euribor (usually that of the previous month) and uses it to recalculate the rate applied and the installments that the client will pay until the next bet. up to date.
To customers with review in Augusttherefore, the quotas will be recalculated with the July Euribor, the value of which will be 0.997%. Your interest will increase significantly, as the price of this index was negative half a year and a year ago: -0.477% and -0.491%, respectively. Note that the historical minimum value recorded by Euribor is -0.505% (January 2021).
How much more money will these mortgagees pay?
Let’s say a person has an average mortgage of 150,000 euros, with a term of 25 years and an interest rate of Euribor plus 1%. If your contract is reviewed every six months, the costs will increase by 102.05 euros per month, or 612.30 euros per semester. On the other hand, if the update is annual, the monthly payments will become more expensive by 102.97 euros, which is equivalent to €1,235.64 per year.
How do rate hikes affect mortgages?
Since the beginning of the year, this has been the usual trend for those with variable rate mortgages. The value of Euribor rose from -0.477% recorded in January to 0.997% in July. That’s to say all exam customers in any month of 2022 have had their payments increased after updating your interest.
Mortgageds whose examination arrives in the next few months will not be exempt from paying more either. Most forecasts suggest that Euribor will continue to rise in the rest of the year and into the next. For example, according to the analysis department of Bankinter, the value of this index will be 1.90% in December and 2.20% in 2023, while the Association of Financial Users (ASUFIN) predicts that it will be 1.50% at the end of 2022 and 1.90%% next year.
These forecasts are based on the new policy of the European Central Bank (ECB). To contain the high inflation in the euro zone, which currently stands at 8.6% per year (data from June 2022), this body was forced to raise its interest rates, which rose from 0% to 0 .50% on July 21.
Euribor represents the average interest rate at which the main European banks lend money to each other. When the European Central Bank raises its rates, it is more difficult for entities to obtain financing through this body. They therefore make the loans they grant to other banks more expensive, which increases the price of Euribor.
Can Euribor rises be avoided?
Yes, the experts think that switch to fixed rate This may be a good idea, since the installments will no longer become more expensive if the Euribor rises. The current fixed rates, around 2.50%, are higher than those offered a few months ago, but can still be considered attractive (they were above 3% or 4% a few years ago).
Yes, it is suitable make this change as soon as possiblesince banks are expected to gradually increase their fixed interest rates.