The indicator that most mortgages in Spain are referred to rises in the day rate from 0.1660% to 0.213%
The simple expectation that the European Central Bank (ECB) will be forced to raise interest rates sooner rather than later – we are even talking about July – has caused the Euribor to react upwards to push the indicator back into positive territory, from which, in an economic normality, it should never have left.
The 12-month Euribor, the index to which most mortgages in Spain refer, already closed April with a positive average of 0.013%. It is the first time in six years that he has done so. And all indications are that May will repeat the trend, having started the month with a daily rate rising by 47 thousandths, from 0.166% to 0.213%.
To get an idea of the evolution, we have to take into account that in March the average was around -0.237%. And in December at -0.50%. Some analysts, such as Bankinter’s, even see the indicator hovering around 0.40% in December 2022 and 0.80% in 2023.
With a rise in the index like the current one, which has risen by about half a percentage point in the past year, this could mean an increase in mortgage payments that would be between 170 and 350 euros per year, with the closing data for April. Although the amount will always depend on the time of the mortgage review and the difference applied to the loan, as well as whether it is fixed or variable.
For now, all entities have started moving the tab to adapt their mortgage offer to the new reality. And the general move is to make fixed-rate mortgages, which until now have dominated the banking window, more expensive to make the variables more attractive to the customer.
In any case, the current offer remains much more attractive for flat rates, according to the latest public data from the National Statistical Institute (INE). But financial institutions expect the situation to change if the Euribor continues to climb.
In any case, after years of negative yields weighing down the sector’s margins, the benefits to be gained from it will go undetected in the near term. As explained last week by Leopoldo Alvear, financial director of Banco Sabadell, the rise in the Euribor will have a positive impact that will only be visible from 2023.
During the presentation of the results, the entity explained that mortgages are generally repriced with a delay of two months. In other words, the February Euribor ratios would have been applied in April, when the indicator was still at -0.4%. And the positive data from last April would be applied as early as June, leaving only half a year to collect the results of the return to normalcy in terms of interest rates.
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.
