Most analysts predict that the twelve-month Euribor, the main reference for mortgages, will end this year between 1.5% and 1.9% (in December last year it close at an average of -0.502%). The fork oscillates between the 1.41% estimated by Funcas, the fund’s foundation, and the 1.90% calculated by Bankinter. Towards the end of 2023, there are already estimates reaching and even exceeding 2%.
Last month this indicator hovered around 1%, closing on average at 0.992%, after reaching 1.2% when the European Central Bank (ECB) raised interest rates to 0.50 points In any case, it is around the levels of a decade ago. Compared to a year ago, the increase is very substantial, since in July 2021, the Euribor stood at -0.491%, so the rise is a little more than 300% or, the which is the same, 1.5 percentage points. Since the beginning of August, the daily rate has moved around 0.94% and 0.96%, which means some moderation, but the trend is up.
The increase, in any case, is transferred to the pockets of those who have a mortgage at a variable rate, which are more than four million users. Someone with a mortgage of 150,000 euros with the Euribor + 0.99 interest for 30 years and with a review in July will see the mortgage fee increase by about 100 euros, that is, they would go from paying 448.72 euros to month to pay 549.49 euros from this review. This means an increase of 1,209.24 euros per year.
The banking sector, which in recent months has enjoyed a real boom in the marketing of mortgages, estimates that families can withstand increases in interest rates to between 1% and 2%. CaixaBank Research predicts a twelve-month Euribor at 1.48% this year and 1.78% at the end of next year. According to this research service, the dynamism of new mortgages continues, as was reflected in the presentation of results for the first semester of the major financial institutions. In 2022, CaixaBank expects the credit portfolio in the private sector to grow (0.5%). Credit to households will suffer from the uncertainty associated with the Ukraine conflict, the decline in consumer confidence and consumer spending, but the housing and consumer portfolios will register positive rates, they estimate.
CaixaBank has increased the granting of mortgages by 58% in the first half of the year and, for the first time in more than a decade, new hires have exceeded repayments. The forecast is that the second semester will remain strong in this segment, as the real estate market is very dynamic.
In any case, a certain slowdown is expected from September, but not so much because of the rise in rates, but also because of the increase in prices and the lower power of the economy. However, there are also other factors that suggest that real estate demand will remain. For example, foreign demand, which represents 14% of the total. In some communities, such as the Balearic Islands or the Levant area, the percentage reaches 30%, according to CaixaBank Research.
At Banco Sabadell, which also recorded a record level of mortgage granting, they estimate that the one-year Euribor “will not go beyond 2% or 2.5% at the end of 2023”. Although it will all depend on inflation. For Bankinter analysts, the annual Euribor will end this year at around 1.90%; 2.20% in 2023 and 2.00% in 2024.
In any case, the market has changed. Fixed-rate mortgages, which have a term of between 25 and 30 years, today range between 1.7% and 2.9% and without bonus, that is to say without requirements such as direct debiting the payroll, between 2.2% and 4.3%. For their part, the variable rate ones, with a term of 30 years, start from a rate in the first year that goes from 0.6% to 1.87% and the differential from 0.6 to 0.89 , if they are subsidized (by linking the customer to other products); and with a rate in the first year without bonus of 0.6 to 2.97% and a differential of 0.95 to 2.05. The growing trend of families for mortgages at fixed interest rates began a few months ago, when the Euribor rate began to rise. Currently, they account for around 16% of the total.