Euribor closed July very close to 1%

The Bank of Spain confirmed that the 12-month Euribor closed the month of July on a monthly average of 0.992%. This shows that, compared to 0.852% in June, with which upward trend continues which began in early 2022, although data confirms that the indicator has slowed its progress over the past month. The rise in Euribor is 1,483 points compared to a year ago, when it stood at an average of -0.491%, which is the largest year-on-year increase recorded to date.

However, the indicator showed slight signs of moderating in its growth throughout the month of July, since after recording the strongest monthly increase in its history in June, in July, it advanced only 0.14 pointsrefusing to cross the 1% mark, despite the fact that interest rate hikes European Central Bank (ECB) raised the Euribor to 1.2% on July 22, only to deflate afterwards.

The new jump Euribor will involve a monthly fee increase of those who must do the annual review of their variable rate mortgage. However, the new jump in the index implies an increase in monthly fees for those who have to do the annual review of their variable rate mortgage. Concretely, a variable mortgage over 30 years of 150,000 euros and with a Euribor spread of +0.99% will experience an increase in your monthly mortgage 90.28 euros or, which comes to the same thing, 1,083.36 euros per year. If the amount of the loan was 300,000 euros, with the same conditions, the increase in the monthly payment would be 180.55 euros, so the mortgaged person would pay 2,166.6 euros more per year.

The Bank of Spain also published that the mibor, the one-year interbank rate which served as the official reference in the mortgage market for operations carried out before January 1, 2000, July also closed at 0.992%. As for the new official rates currently being published, the 1-week Euribor stands at -0.457%, 1 month at -0.525%, 3 months at -0.306% and 6 months at 0.466%.

With regard to the short-term interest rate on silver (€STR), defined as the value on the last business day of the month for the purposes of Target, the compound average interest rate at different maturities (one week, one month, three months, six months and 12 months) which is prepared and disseminated by the European Central Bank (ECB), the reference interest rate based on the one-week €STR settled at -0.440%, one month at -0.548%three months at -0.572%, six months at -0.575% and one year at -0.5743%.

It could reach up to 2% next year

Experts from HelpMyCash point out that, as the ECB is expected to continue raising interest rates to contain inflation, the Euribor will remain on the rise, at least, until the end of 2022. According to the analysis department of Bankinter, the value of this index will be 1.90% in December and 2.20% in 2023, while Asufin expects it to be 1.50% at the end of 2022 and 1.90% next year.

Mortgage Director at iAhorro, Simone Colombelli, acknowledged that the ECB rate hike will affect citizens who wish to apply for a new mortgage, especially if they want it at a fixed rate, as it will cost banks more to finance themselves and, presumably, they will pass this cost on to users. “Entities will increase the interest rates of their offers to the same extent and surely this effect be noticed immediatelyColombelli warns.

Regarding variable mortgages, the mortgage manager at iAhorro anticipates that the current offer will be maintained or improved. Of course, note that anyone who has a variable mortgage and needs to review it now, will experience a significant increase in the down payment, whether the review is six months or twelve months.

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