A woman looks at the advertisements of a real estate agency. /
This is the highest level since June 2019. The Euribor anticipates a new rise in interest rates and the average for August is already above 1.1%
The increase in the cost of mortgages in the heat of the rise in the Euribor accelerated notably in July. The average rate at which Spanish entities granted loans for home purchase stood at 1.986%, its highest level since June 2019 when it exceeded 2%.
The figure has risen for five consecutive months, according to data from the Bank of Spain published this Friday in the Official State Gazette (BOE). And it implies a remarkable rise from the 1,799% registered in June. A year ago, the average rate was 1.485%.
The rise in the 12-month Euribor began to accelerate at the end of last February, when the market began to anticipate the first increases in interest rates by central banks, given the evidence that inflation was not as transitory as expected, much less after the outbreak of the war in Ukraine.
The indicator to which most variable mortgages in Spain are referenced has risen, practically without respite, since the second month of the year. It was in April when it abandoned the negative rates it had maintained since 2016. And in mid-June it exceeded 1% in its daily rate for the first time in a decade. The average for that month was 0.852%. And in July it rose again to 0.992%.
Although the month of August began with more moderate prices, moving in the daily rate of around 0.92%, the indicator has already had 12 sessions above 1% in the daily rate and on Thursday it marked a new maximum in 10 years by reaching at 1.258%, above the 1.229% of the previous day. So the monthly average until August 19 – only eight business sessions are missing – is already above 1%.
This trend in the Euribor, accelerated by the expectation that the ECB will continue to raise interest rates at its next meetings to deal with runaway inflation of 9.8% in the euro zone, has completely changed the banks’ strategy, that they began to make their fixed-rate loans less attractive (making their interest more expensive), in order to divert new clients to mortgages linked to the Euribor.
Specifically, those who reviewed their mortgage annually in July (taking into account an average loan of 137,900 euros over 24 years with Euribor interest plus one point), will have seen their fee increase by more than 93 euros per month. That is, just over 1,100 euros a year.