With inflation rising, the European Central Bank has been forced to raise interest rates to try to contain rising prices. However, as a result of this increase, the Euribor has grown and with it the variable mortgages.
Euskaraz irakurri: Euriborra hipotekadunak itotzen hasi da
Although inflation fell two-tenths in August compared to the previous month, inflation in the Spanish state and the eurozone continues to run rampant, reaching record highs known only nearly four decades ago. Immediately Consumer price index (CPI) at 10.3% in Euskadi and 11% in Navarraprices continue to skyrocket, so the European Central Bank (ECB) has been forced to raise interest rates to stop this escalation; it did that already in July, up half a percentage point, and on September 8, it did the same again to 1.25%.
Raising interest rates is one of the measures the ECB must take to curb inflation. Why? Because the more it costs to pay off a loan, the lower the demand, production falls and prices stabilize, at least in theory.
However, these interest rate hikes have a direct impact on the euribor, the reference indicator for most mortgages in the Spanish state. This continues to rise sharply and shoots up to an average of . in August 2,156% in Septembera record in more than a decade.
This increase brings a new price increase of the repayments of variable mortgages, since a year ago, in September 2021, the Euribor amounted to -0.42%.
According to calculations by Asufin, the Association of Financial Users, this increase translates into higher prices of approx 1000 euros per year if a standard loan of EUR 100,000 is taken as a reference, with a repayment term of 25 years and with a Euribor of 2% plus the difference that each entity charges to each customer.
Faced with this new scenario, more and more people with mortgages value switch to flat rate. The Spanish Government’s Minister of Economy and Digital Transformation, Nadia Calviño, recalls that from 2019 there are several options to change the loan, including subrogation and novation.
In the first quarter of this year, the number of fixed-rate mortgages is almost equal to that of variable-rate mortgages, and with this situation of insecurityIn recent months, more and more people have wanted to sign up for this type of mortgage, which is freed from the escalation of rates. However, with the Euribor in full “sprint”, financial institutions they stop encouraging and even offering fixed mortgages which in some cases have exceeded 3.6% APR. Interested parties therefore have to wait until the water has calmed down to be able to request the change and thus lower the terms of the loan.
(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src = “//connect.facebook.net/es_ES/sdk.js#xfbml=1&version=v2.8”;
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));
Source: EITB
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.
