The 12-month Euribor, the index to which most variable mortgages in Spain are referenced, continues to climb and plans to close this month of january in the environment of 3.37%, the highest level since December 2008, when it closed at 3.452%. This has a direct effect on variable mortgages, whose installments can become more expensive 3,400 euros per year.
This data is the result of a daily average throughout the month and that the Bank of Spain has to confirm at the beginning of February. However, it should be noted that in all days of the month it has exceeded 3.3%, reaching a peak of 3.7% on the 11th of this month. With these data, the increase in the Euribor in January would be 3.15 basis points compared to the data for December, which closed at 3.018%.
It should be remembered that in January 2022 this index was negative, specifically at -0.477, and entered positive last April, when it accentuated its upward trend to the current figures. In addition, it is possible that it will suffer another new increase in the next month of February, since this week both the European Central Bank (ECB) and the United States Federal Reserve (Fed) meet with a forecast of raising interest rates.
It will make the installments more expensive by almost 300 euros per month
The rise in the Euribor has an impact on mortgage prices and a person who has contracted a 30 year variable mortgage of 150,000 euros and with a differential of 0.99% plus Euribor, will suffer a increase in your mortgage payment of around 294 euros per month. In absolute terms, you will go from paying about 450 euros to about 744 per month, which is equivalent to an additional annual outlay of more than 3,500 euros.
With these same conditions, a mortgage of 300,000 euros of capital pending amortization and 30 years pending payment would have to assume a monthly increase of 588 euros, that is, more than 7,000 euros per year.
Despite the increase in the Euribor experienced in December, the director of iAhorro Mortgages, Simone Colombelli, has highlighted that in January stability has returned financial institutions and their products. “We are gradually returning to normal banking dynamics, to changes in commercial offers once a quarter and not every month or every week, as we have seen in 2022; that was truly crazy,” he remarked.
Despite this stability, people who in the coming weeks have to review their mortgage payment using the January index as a reference will experience the largest increase in recent months. The differential of 3.81 points that has been registered in the Euribor in the first month of the year is the highest observed in recent months, above the differential of 3.52 points in December or 3.32 integers in November.
It will continue to grow and may touch 4% at the end of March
Thus, the Euribor has started the year with new rises and, according to experts, will continue this trend given the forecast that the ECB will continue raising interest rates. The person in charge of mortgages at HelpMyCash.com, Miquel Riera, sees it as very likely that the Euribor will continue to rise and reach between 3.5% and 4% “at the end of the first quarter of 2023 or at the beginning of the second.”
As Riera explains, the evolution of the indicator depends, to a large extent, on the ECB’s policy, since “it is more difficult for financial institutions to borrow money” if the ECB raises rates in order to contain inflation. Consequently, she adds, “they increase the interest that they apply to the loans that are granted between them, which is the one that is used to calculate the value of the Euribor.”