The President of the European Central Bank, Christine Lagarde. /
If this trend continues, the installment of a variable-rate mortgage for a Gipuzkoan will rise by 181 euros per month, that is, 2,172 euros per year
The first reaction of the Euribor after the decision taken by the European Central Bank (ECB) to raise interest rates to tackle inflation has triggered the mortgage indicator again to place it above 2% yesterday. It had been more than a decade since this index had been in this environment. And the practical consequence is once again a foreseeable increase in mortgage payments for those who are going to review their variable-rate loan. With only six days listed, it remains momentarily at 1.9%, although it will probably end the month with an average close to 2%.
The first consequence of the rate hike applied since Thursday by the ECB will be a more expensive mortgage payment than until now. If we turn to the simulator of the Spanish Mortgage Association (AHE) to find out how much is the monthly extra cost of a Gipuzkoan who must review his loan, for example at 26 years, with this August indicator – and for an average amount of around 150,000 euros in the territory according to the INE–, the monthly fee shows a rise of 181 euros (the Euribor of September 2021 closed in negative, at -0.492%). That, taken over a whole year, means 2,172 euros more, although it should be remembered that the final amount will always depend on the credit review schedule and the spread (in this case we have applied Euribor +1%) that each citizen has committed to their bank , as well as the type of credit (fixed or variable).
At fixed rate
In the case of those who are mortgaged with a fixed rate, they get rid of any change: they will continue to pay the same fee that they had contracted. The advantage of this modality is that it cushions the times of rate rises, although it does not benefit from years in which interest rates are low, as in the last decade.
Already in August, the Euribor closed at 1.2%, breaking all records. This is the highest reference of this interbank indicator precisely since the summer of 2012, now 10 years ago. To make matters worse, not only did it turn around but the change experienced led it to go from -0.5% last December to the final average 1.2% of that month.
Throughout last August, the evolution of the Euribor has been upward. The last day of the month closed at 1.7%. September has already started rising to the final 2% known this past Friday.
Aware of this reality that stalked mortgage holders, a large part of those who have financed the purchase of a home in recent months have opted for fixed rate mortgages (73% of the total) over variable rates (27%).
The average interest of the former continues to be higher (2.6%) compared to the latter (2%). In any case, the revisions that are now being carried out mostly affect those who opted for the variables years ago, with spreads that in many cases barely reached 0.5 points over the Euribor, an offer that is very different from the current one.