The increase in the indicator means an additional average cost of 1,500 euros per year for those who review their mortgage with this month’s data
The Euribor figure has once again crept into the lives of Spanish households with an increase leading it to close at 1.2% in August, breaking all records. On the one hand, it is the highest reference for this interbank indicator exactly since the summer of 2011, 11 years ago. On the other hand, not only has it turned around, but the change experienced this year has resulted in it moving from -0.5% in early January to the current 1.2%.
During the whole month of August, the evolution of the Euribor is upwards. In fact, it ended the month this Wednesday at a price higher than 1.77%, so the September outlook isn’t rosy at all, starting with that reference that households have been unaccustomed to for the past decade.
With this data on the table, the mortgaged households that need to review their loan with the August reference can now do their accounting. And they don’t deliver positive results for their wallets. A variable mortgage of 180,000 euros over 25 years with a spread of 1% and annual statement goes from paying a fee of 639 euros to paying 785 euros, which is 146 euros more per month, which is equivalent to an additional payment of more than 1,700 euros per year.
As early as April, and for the first time since February 2016, the most widely used indicator to calculate home loan repayments closed above 0% for a month. Of course it was only a few hundredths, as the index ended at 0.013%.
This early data revealed a new economic and financial reality that has since become apparent. So I was already anticipating the decision that the European Central Bank (ECB) would take on raising interest rates. Although he had to wait until last July to verify this measure, which led him to increase the official price of money from 0% where it was in 2014 to 0.25%.
In fact, the board of directors will meet next week, on the 8th, to review another rate hike. It is possible that it will achieve 0.5 point and even 0.75 extra points compared to the current 0.25 points. The objective of the institution chaired by Christine Lagarde is the rapidly rising European inflation, which rose by 9% in August. The ECB’s target is to keep prices around 2%.
For this reason, as the US Federal Reserve (FED) has already done, the ECB has chosen to raise interest rates, in order to slow the economy significantly by having to allocate more money to loans from households and businesses. In the case of the US, the rates are 2.25%.
FED president Jerome Powell has warned that businesses and households will have to endure “some pain” as a toll to deal with the high inflation the country has been experiencing for months. The Federal Reserve’s policy in Jackson Hole, Powell has indicated that failing to contain the price escalation “would mean a lot more pain.”
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
