The Euribor has closed this month of September 2022 at 2.233%, the highest data seen since January 2009, when it stood at 2.622%. Then, in Spain there was an economic crisis derived from the global financial crisis of 2008, during which, curiously, the European Central Bank (ECB) made decisions contrary to those of these months: lower interest rates to fight against a recession . Thus, rates stood at 2%, only 0.75 points above the figure currently registered.
With regard to the increase in this reference index for variable mortgages, this month’s is the highest in its history. After closing August 2022 at 1.249%, we see that it has shot up 0.984 percentage points in just 30 days. “It seems that we are seeing, although in reverse, the same curve that marked the Euribor between 2009 and 2008,” says Simone Colombelli, director of mortgages at iAhorro. However, the spokesman for the mortgage comparator assures that “there is no need to be alarmed” because “an Euribor of around 2% is normal”.
Of course, Colombelli prefers to be cautious when making any type of prediction because “seen what has been seen, it is almost impossible to get it right”, although he says that “it is likely that the real estate sector will enter into hard momment in a few months, though don’t think it will be “dramatic”. “What could worry us is that it reaches a maximum of 5%, as it happened in 2008. However, although it depends on what happens with the conflict between Russia and Ukraine and the macroeconomic situation, we must see that at that time the banking It granted mortgages very easily and the solvency that is required today of citizens to grant a mortgage is much higher from the start, so we could expect that the impact will be less, clarifies the expert.
Almost 400 euros more per month for a variable mortgage
This rise does not only affect the financial market, it also impacts citizens. Those who have contracted a variable mortgage and have to do the annual review of their fee this month will see how increases to 389.43 euros per month in case the mortgage loan in force is 300,000 euros (the average of mortgages in large Spanish cities) and half, 194.72 euros, in case the money lent by the bank was 150,000 euros.
So much so that, whoever has contracted a 30-year variable mortgage of 150,000 euros and with a differential of 0.99% + Euribor and has to do their annual review this month will see how their mortgage payment goes from 448, 65 euros per month to 643.37 euros as of this review. This would mean an increase of 2,336.64 euros per year. In the event that the amount of the mortgage rises to 300,000 euros, under the same conditions, the installment would rise from 897.31 euros to 1,286.74 euros, so the annual increase in this case is 4,673, 16 euros.
There are still good conditions in the market
“It is still a good time to buy a home and you can still find good deals on the market; that yes, as long as a good study is made of all of them and a comparison is made between those given by the different banks”, Simone Colombelli qualifies. From the mortgage comparator iAhorro they are still signing mortgages these months, below 2% at a fixed rate, “excellent conditions, given the current trend,” clarifies its mortgage director. These conditions, yes, are not offered by all banks, but by doing a good search they can be found. Of course, warns Colombelli, “As of 3%, it could already be considered a slightly worse fixed mortgage”.
With regard to variable mortgages, what the iAhorro mortgage director highlights is that “we have even seen variable mortgages with spreads below 0.30%” and “a variable with a spread above 0.99% is totally improvable”, so whoever has a variable loan contracted with a spread equal to or greater than that could be subrogated to another variable as well as to a good fixed one or to a mixed. And it is that mixed mortgages are now also a good option: “The first part of mixed mortgages, which is governed by a fixed rate, is normally below 2%, this is a good rate to take into account the first 10- 15 year mortgage. Then comes the variable part, but the mortgaged party will then be able to decide if it pays to continue with that loan or to change”, concludes Colombelli.