2023-05-23 20:00:21
The evolution of the Euribor is getting closer every day to the 4% barrier in an upward trend that resumed in mid-April and is expected to end this month on its reference. The main mortgage index closed this Tuesday at 3.90%, a reference that it had not seen since the beginning of March. That was when the first attempts at the banking crisis appeared, with the fall and rescue of Silicon Valley, Signature and Credit Suisse, and the Euribor suddenly collapsed due to fears of a new financial crisis.
But that episode disappeared from the banking system and the index is headed almost inevitably towards the 4% border. When it reaches it, it will return to the same level it had in mid-2008. Then another crisis began, the great recession derived from the real estate bubble after bringing the cost of mortgages to a record.
A decade later, the installments of the loans referenced to variable interest are growing at a rate superior in many cases to 200 euros per month. Specifically, a household that has contracted a variable mortgage of 150,000 euros over 30 years and with a differential of 0.99% plus Euribor and must review its interest rate in the month of May, will register an increase in its mortgage payment of about 285 euros per month. In absolute terms, it would go from paying about 500 euros to almost 790 euros, which is equivalent to an additional annual outlay of more than 3,420 euros.
TYPES OF MORTGAGES:
70%
of the new mortgages that are signed are of a fixed rate, that is, with an invariable installment at least during the first years of the life of the credit. 30% are variable. Although most of the mortgages in force are still linked to the Euribor.
So far in May, with a week of business days to go until the end of the month, the Euribor average is above 3.8%. If this rate is maintained, the differential with respect to a year ago has stood at 3.5 points.
This evolution of the mortgage index only anticipates a reality: that the official interest rates will rise again in one of the next meetings of the European Central Bank (ECB): that of June 15 or that of July 27. In either of these two ordinary meetings, the central bank council will approve a new rise in the price of money, which is already at 3.75% compared to the previous 3.5%.
slow uploads
This was anticipated by the president of the ECB, Christine Lagarde, at the last meeting: “We are not pausing the rate hikes and there is still a long way to go,” Lagarde pointed out to the questions from the journalists. She and she insisted that monetary policy this cycle is a journey that “isn’t over yet.”
As interest rates rise, the real estate market is paralyzed due to the impossibility of a large part of buyers to access a home they own. The purchase and sale of real estate has fallen by 5.7% up to March at the same time that the banks continue to restrict the granting of mortgages, with an increasingly selective commercial policy. Despite this situation, the Fotocasa portal maintains that 47% of Spaniards were interested in buying a home in February 2023, three percentage points more than six months ago.
Botín rules out that bank collapses are a “systemic crisis”
The president of Banco Santander, Ana Botín, has ruled out that the collapses that occurred in March of medium-sized banks in the United States and of Credit Suisse in Europe constitute a “systemic crisis”, while stressing that “we are not in 2008”. . This was indicated by Botín during an interview with ‘Bloomberg TV’ in which she recalled that regulated global banks have much higher levels of capital than 15 years ago. And many of the risks have shifted from the banking system to other players, since banks now represent 38% of the entire financial system.
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