Although the banking crisis caused by the falls of Silicon Valley Bank and Credit Suisse has caused the euribor has lived in the month of March on a roller coaster, the truth is that the indicator to which the majority of variable mortgages in Spain are referenced will close the month at around 3.7%, above the 3.534% in which ended in February. And although its prolonged rise does not pose any excessive macroeconomic risk for now, it is tightening the belt to many families until almost suffocating themas Funcas warns in an article published in its latest magazine.
The analysis ensures that some groups, especially households indebted at a variable rate in the most recent period and with low or medium-low income, face a sharp increase in financial charges in relation to their disposable income. The savings banks study center details that, taking into account the proportion of indebted households in the two lowest income quintiles -which bear financial burdens 75% and 25% higher than the average, respectively-, and under the hypothesis of a distribution of the debt by years of seniority comparable to that observed for the general population, “It can be estimated that the number of families especially vulnerable to the rise in the Euribor rises to 260,000.”
The effect on mortgages of the rise of four percentage points in the Euribor in the last year, the most pronounced increase since the creation of the euro; not only has to do with the purchasing power of families but also with the loan age, as highlighted by Funcas. The individuals with older loans, with little residual debt, will hardly suffer from the rise in the price of money, unlike those who have just taken out a loan. Funcas calculates that of the 5.7 million loans currently in force, 56.8% –those older than five years– will be relatively unaffected. The impact of the rise in interest rates will be greater for the rest of the mortgages (with an age of less than five years), whose number rises to about 2.6 millionof which almost half are variable or mixed rates.
Funcas calculates that, right now, the outstanding balance of the mortgages stands at an average of 82,700 euros and estimates that each percentage point increase in the Euribor makes the monthly payment more expensive by about 43 euros for an average mortgage contracted for a term of 25 years (most usual maturity). This estimate, however, differs from the analyzes based on the cost borne by recently subscribed mortgages, that is, only those that have just begun to be amortized. For these, the cost of the Euribor increase rises to 73 euros per month.
In short, Funcas that, as a consequence of the increase in the Euribor in the last year, the monthly payment for an average mortgage at a variable rate has become more expensive by 171 euros. However, this result reflects different realities depending on the age of the loan. In the mortgages signed at the beginning of 2022, for example, the fee would have risen in 291 euros.
Of the difficulties that families with fewer resources have to face due to the increase in the Euribor, the Bank of Spain. According to the latest data available to the regulatory body, the percentage of those who anticipate difficulties in making their mortgage payments was already around 7%. at the end of last year after climbing since January 2022 without stopping. So, the percentage was just over 5%.
The data from the regulator itself also anticipate that the situation will get worse. According to their calculations, the variation in the average cost of household debt associated with loans for house purchase was one percentage point between December 2021 and December 2022 as a result of the rate increase. However, the Bank of Spain calculates that this potential variation in the medium term will rise above 2.5 points according to the data obtained by the supervisor by multiplying the proportion of the outstanding balance of the variable interest rate debt by the cumulative increase in the twelve-month Euribor from the end of December 2021.