The euribor, the indicator to which the majority of variable-rate mortgages in Spain are referenced – which account for 75% of the total – has no ceiling. And, according to analysts, he is not going to have a good season. The index closed May at 0.287% -the highest value since February 2015– although the daily rate is already close to 0.4%, which indicates that in June it will break this mark not seen since 2014.
And it is that as Joaquín Robles, Sales & PR Manager of XTB points out, the inevitable rise in interest rates that the European Central Bank (ECB) is preparing to stop the spiral of inflation will cause further increases in the Euribor. “There are central banks such as the United Kingdom and the United States that have already raised interest rates on several occasions with the aim of curbing the advance in prices. In Europe, the slower recovery and the difference in growth between the countries that comprise it had delayed the decision to avoid an economic slowdown. Nevertheless, inflation has reached such high levels that it has forced the ECB to take sides», says Joaquín Robles.
Pending confirmation of the ECB’s decision, the Euribor has gone from -0.477% in January to 0.287% with which it closed in May and it is likely that it will continue to appreciate to levels close to 0.40%, says Robles. And from there up. Bankinter’s Analysis Department, one of the most reputable observers of this market, expects the Euribor will be around 0.80% in 2023. CaixaBank Research forecasts that the index will trade above 0.85% next year.
the bank wins
The unstoppable rise of the Euribor has a clear winner, the banks; and a loser, the mortgaged. As for financial entities, Robles assures that, with this rise, financial entities “will see how all the outstanding capital of mortgage loans referenced at a variable rate has an increase in its profitability and, therefore, generate higher profits. This situation is already being reflected in recent results publications, where most entities are benefiting from the widening of the net interest income, an increase in fee income and lower provisions in the face of a more stable delinquency rate”, he points out.
As for those mortgaged, with the current price of the Euribor, a 20-year variable housing loan of 150,000 euros – the average of the new ones is just over 145,000, according to INE data – with an interest rate of Euribor plus 0, 25% that has been revised with the May Euribor will increase your monthly cost by 49 euros. Namely, 588 euros per year.
Faced with the irresistible rise in the Euribor, mortgage holders have the option of changing their variable-rate mortgage to a fixed-rate mortgage as a possible solution. Although the reality is that financial institutions, faced with the next rise in interest rates, have already begun to change its offer of housing loans and increase the prices of fixed how cheap they offered before to offset the negative Euribor rates. Simone Colombelli, director of Mortgages of the financial website iAhorro, assured Europa Press that financial entities “little by little are placing their offer of fixed rates around 2%, a figure that was very common in 2017 or 2018, but that It is almost double what we saw in 2021 ».
Fixed rates
Along the same lines, they point out from HelpMyCash, although highlighting that fixed mortgages at 2% or something below are still a very good option for home buyers. In its ranking of the best fixed-rate mortgages for May, HelpMyCash highlights the fixed-rate mortgages from Evo Banco (1.94% APR), Targobank (1.67% APR), Ibercaja (2.21% APR), Openbank (2, 37% APR) and Santander (2.36% APR).
Following the opposite path is, for HelpMyCash, not recommended. Changing a fixed mortgage to a variable one, at this time of economic uncertainty, “is a mistake” and is only convenient for clients who request a very short-term mortgage or who know that they can cancel it soon, they say.