He euribor It continues to jump barriers and makes things more and more difficult for those who have a variable rate mortgage. The benchmark for most of these loans Today it has exceeded the barrier of 3.5% in the daily rate. Specifically, it has climbed to the 3,51%, a level that has not been seen since December 2008. The average for the month of February thus stands at 3.44% with only nine days of contributions, which would make a 25-year mortgage of 180,000 euros more expensive and with a differential of Euribor plus 1% and annual review at 343 euros per month. Or, what is the same, in 4,116 euros per year.
The indicator, which had been in negative territory for several years, began its upward trend on February 4 of last year, after the European Central Bank (ECB) admitted that it could raise official interest rates due to rising inflation in the eurozone. A trend that was reinforced with the start of Russia’s invasion of Ukraine on February 24, 2022.
More uploads in sight
The bad news for homeowners is that the indications and certainties of the last few weeks suggest that its escalation will not stop in the short term. Complying with the pattern expected by analysts, on February 2 the ECB increased the official price of money for the euro area by 50 basis points, up to 3%, its highest level since December 2008, the fifth increase it had approved. the organization directed by the French Christine Lagarde since July last year.
As interest rates rise, financial institutions find it increasingly difficult to borrow money from the Eurobank. And consequently, they also increase the interest that they apply to the loans that are granted between them, which is the one used to calculate the value of the Euribor. As pointed out at the time by the financial comparator HelpMyCash, it is usual for the Euribor to exceed the official price of money in a range that oscillates between 0.5 and 1 point, with which the ECB decision indicates that the differential to which most Spanish variable mortgages are referenced it will touch 4% sooner rather than later.
In the event that the Euribor finally reaches that 4% this month, a 25-year mortgage of 150,000 euros with an interest of Euribor plus 1% that is reviewed annually with the value of this month will become more expensive by about 334 euros per month . Or, what is the same, in little more than 4,000 euros more per year.
Despite this, there are entities such as CaixaBank that consider, however, that even if the Euribor reaches 4%, their client households with a mortgage at a variable interest rate would not allocate more than 30% of their income in the event that it reaches such a level.
4% path
If it does not arrive in February, it is very likely that the Euribor will touch 4% in March. The rise in interest rates at the beginning of the month will not be the last to be approved by the monetary institution led by Lagarde. The European Central Bank warned after that meeting that there will be more for try to bring inflation back to 2%, the level that the institution considers optimal for the European economy. The governing council of the entity “will continue the course of significant increases at a sustained rate in interest rates and will keep them at sufficiently restrictive levels to ensure the timely return of inflation to its objective of 2% in the medium term”, as explained it’s a statement. “In view of the pressures on underlying inflation, the Governing Council plans to increase interest rates another 50 basis points at its next monetary policy meeting in March and will subsequently assess the future path of its monetary policy,” the agency announced. directs Lagarde.
Although in the subsequent press conference after the announcement of the rise, the ECB president assured that the intention to raise interest rates again in March by half a percentage point “is not an irrevocable commitment”, she also stressed that they are necessary more significant rate hikes to bring inflation down to its 2% medium-term target. When asked if after March they will have concluded with the rises in interest rates and these will have reached their maximum in this bullish cycle, Lagarde assured that they had not. «We know we have ground to cover.”which implies that interest rates reach a restrictive level, in which they restrict economic growth, and that they remain at that level for the time necessary for inflation to drop to 2%, explained the ECB president.