In one 0.992% closed the euribor this month of July 2022. Everything indicates, given the advance that the benchmark of the variable mortgages so far this year, this month would be the month where it could break the 1% barrier, but it has not. Euribor has risen 0.14 points from June, the smallest increase since Marchalthough if we compare this month’s data with that of just a year ago (in July 2021 it stood at -0.491%), the increase is just over 300% or , which amounts to the same thing, 1.5 percentage points.
Despite a slight moderation, the value recorded this month will significantly affect those who have currently contracted a mortgage variable and it is their turn this month to review their rates. To see how much they will rise, you have to look at how Euribor was just a year ago, in July 2021, and how it is now. Thus, with this indicator at 0.992%, the one who has now taken out a variable mortgage over 30 years of 150,000 euros and with a spread of 0.99% + Euribor You will see how your mortgage payment increases by 100.77 euros, that is, it would go from 448.72 euros per month to 549.49 euros from this review. This would mean an increase of 1,209.24 euros per year.
If the amount of the mortgage loan was 300,000 euros, with the same conditions, i.e. with a repayment period of 30 years and a difference of 0.99% + Euribor, the increase in the monthly payment would be €201.54 (from 897.44 euros to 1,098.98) and the annual increase would be €2,418.48.
And how does this affect fixed mortgages?
More than the rise in Euribor, which also, fixed mortgages will rise due to thetailor-made approved last week by the European Central Bank (ECB) which consists of raising interest rates by 50 basis points in an attempt to contain inflation of the euro zone, which reached 9.6% in June and this month could be around 8.6%. This announcement surprised the director of mortgages at iAhorro, Simone Colombelli, who assures that “we expected a rate hike from the ECB, but we expected it to be 0.25%and not 0.5% as was finally the case, and this will affect citizens who want to apply for a new mortgage, especially if they want it at a fixed rate, because the entities will increase the interest rates to the same level measurement of the interest of their offers.
“A rise in interest rates means that It will cost more for banks to finance themselves, so they will surely pass this cost on to users“, explains the spokesperson for the comparator and mortgage loan advisor, who adds that “perhaps many banks will review their mortgage and loan offers on the rise, and it is possible that in a few weeks it will be very difficult to find fixed mortgages below 2% TIN; we were already hovering around 2% and now there could be another push to 2.5%”.
When will the banks implement the rate hike?
For new mortgages “demand will be immediate”, specifies Simone Colombelli, who also adds that “if an entity does not act yet, it will be because there are already a lot of people on vacation; the only thing that can save us is the beach”.
Therefore, the increase in interest rates on loans is surely the measure most applied by most banks, although “there could be entities that change their action policy a little, without being so aggressive in price increases, and compensate, for example, with the “imposition” of more ties”, specifies the spokesperson for the comparator and mortgage advisor.
Colombelli now recommends taking out mixed mortgages pbecause “now the fixed part of a mixed mortgage, i.e. the first seven or ten years of the loan, can be around 1.10% or 1.30% NIR, although with rising rates, these percentages could also increase a bit. But even so, if the fixed mortgage reaches 2% or 2.5%, it pays off with quite a bit of difference to take out a mixed mortgage”.