The monthly average of the indicator is already 0.6%, which would mean an increase of more than 72 euros per month when the mortgage is revised.
There is no ceiling. The Euribor continues to anticipate the rise in European Central Bank (ECB) interest rates in July and the indicator that most mortgages in Spain are referred to rose this Tuesday to 0.957% in daily rate, a level not seen in nearly a decade. . Specifically since July 27, 2012. The increase was 40% in just three sessions. And the calculation is overwhelming compared to the -0.5% in which the indicator rejected 2021.
Due to this abrupt increase, the monthly average so far in June stands at 0.604%, well above the 0.287% average recorded in May and far from the -0.487% in which the Euribor recorded in June 2021.
If we do a theoretical exercise where the average of the month closes at these levels, an average mortgage of $150,000 over 25 years with a spread of 0.5% would go from paying a monthly installment of $500 to one of $572. euros. That is 864 euros more per year.
In fact, all indications are that the efforts of households to cope with their home loans will have to be even greater, given an upward trend that is consolidating as the meeting at which the ECB will make the first hikes approaches. in 11 years to try to contain runaway inflation in the eurozone to a maximum of 8.1%.
This perspective could even pulverize the forecasts of the banks themselves, which build their corporate and fiscal forecasts based on a 12-month Euribor forecast that in some cases would have come out short. For example, at the end of March, Bankinter estimated that the indicator will close on average 0.40% this year and go to 0.80% in 2023. For its part, CaixaBank presented its new strategic plan a month ago. And the entity estimates that the Euribor will go from an average of -0.5% in 2021 to 1.5%-1.6% in 2023-2024.
The rate hike expected by the Euribor is also causing real destruction in other markets, such as fixed income. Investors fear that the new cycle of gains will eventually put an end to the weak economic recovery. And fears of a recession have sparked a wave of government bond sales, pushing prices down and boosting profitability (moving in the opposite direction).
The yield on the 10-year German bond – the main European benchmark – bounced strongly to 1.75% for the fifth consecutive session. And the yield of the Spanish bond of the same maturity shot up to 3.12%. At the end of 2021, it was trading at 0.5%. It is the first time since 2014 that this benchmark (which shows the interest rate investors charge to buy a country’s debt) has surpassed 3%.
“We operate in a very complex context and we have to resist the temptation to buy on dips. The adjustment in stock markets and bonds has not yet been completed because there are many open fronts,” they say from Bankinter’s analysis department.
The next key appointment for this market is next Wednesday, with a new Federal Reserve meeting in which the body will in principle raise interest rates by 50 basis points. However, part of the market is beginning to speculate that the increase is 75 points. Something that could pressure the ECB to be more aggressive than expected as well.
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.
