The preliminary index stands at 0.285%, 27 points more than in April and 76 more than a year ago, anticipating a hike in interest rates by the ECB in July
The twelve-month Euribor has been marking negative figures for six years now. This indicator used to calculate floating rate mortgages rose to a preliminary monthly average of 0.285% in May. That is 27 points more than in April (0.013%) and 76 points more than a year ago (- 0.481%). tightening of the monetary policy of the US Federal Reserve (Fed), which has raised interest rates to contain inflation.
In Spain, about four million mortgages are taken out at a variable interest rate linked to the Euribor, which means an average price increase of 600 euros per year. And it’s that since April 12, when the Euribor traded positively for the first time since February 2016, it hasn’t stopped rising, meaning the fees of those with floating rates are increasing. In concrete terms, an average mortgage of 150,000 euros over 20 years with a spread of 1% on the annually revised Euribor from 658 to 708 euros, which amounts to 600 euros extra per year.
And the European Central Bank (ECB) will follow in the footsteps of the Fed and start raising the money price in July. Her chair, Christine Lagarde, recently pointed out that the entity’s meeting scheduled for July will be the right time to implement the eurozone’s first rate hike in more than a decade. For example, the agency will leave negative interest rates behind by the end of the third quarter. It was the end of the ECB’s ultra-expansive policy that changed the downward trend of the Euribor, which registered its all-time low at -0.502% in December 2021. So everything points to the interest rate hike in July ensuring that this index continues to rise throughout the year.
Bankinter’s Analysis Department estimates that the index will close the year at 0.4% and the next at 0.8%, while CaixaBank analysts suggest the index could hit 1% next year. For this reason, the experts at HelpMyCash assure that changing from a fixed mortgage to a variable one, in this time of economic uncertainty, is “a mistake” and is only useful for customers applying for a very short mortgage or who know they can cancel it quickly.
The INE data shows that nearly 73% of mortgages taken out in March were signed at a fixed rate, only 27% were signed at a floating rate, with three months in a row where the fixed rate is over 70% and the trend of recent years continues , while half of the mortgages signed are of this type, which will reduce the impact of fluctuations in the Euribor due to interest rate hikes by central banks.
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.
