Euribor rises again to its highest level since December 2008

The Euribor, the indicator to which most variable mortgages in Spain are referenced, will close October with the highest monthly average since December 2008, standing at 2.626%.

This increase is the tenth consecutive month and is due, among other things, to the new interest rate hikes by the European Central Bank (ECB), which took the decision last Thursday to increase them by 75 basis points.

With this data on the table to close the month of October, a person who has taken out a 30-year variable mortgage of 150,000 euros and with a differential of 0.99% plus Euribor will suffer an increase in their mortgage payment of around 234 euros, that is, they would go from paying 449 euros per month to paying 683 euros from the revision, which is equivalent to an increase of 2,800 euros per year.

However, the rise in the Euribor is also affecting fixed-rate mortgages, which are becoming increasingly more expensive. According to iAhorro, there are already many banks that have fixed NIR (Nominal Interest Rate) above 3%. And their forecast is not good at all: “In six, seven or eight months things will get worse, I have no doubt. Our forecast is that by the spring of next year the fixed rate will worsen considerably because the tendency is for it to get worse, although it is slow”, they explain.

Leading experts in the real estate sector already pointed out at the beginning of the year that “the strange thing” was the negative figures in which the Euribor was moving during 2021, so its increase was something “foreseeable” and that it should be dealt with normally.

3% forecast at the end of the year

Although it is still far from the value recorded in 2008 (3.452%), experts warn that the trend is that the Euribor will continue to grow in the coming months, possibly reaching 3% at the end of the year.

“Growth has slowed in the last month. Between August and September the increase was almost one point and this month it has fallen to 0.393 points. If we look at the trend of other years, at the end of the year the Euribor always moderated its growth a little”, says the director of mortgages of the mortgage comparator and advisor iAhorro, Simone Colombelli, who adds that “this year we cannot expect this moderation to be so evident, especially if the European Central Bank (ECB) continues to raise rates between now and December”.

In this sense, further rate hikes should not be ruled out, as the central bank’s main objective is to reduce inflation in the Eurozone to around 2%; a figure that is still a long way off, after the Eurozone average rose to 10.7% in October.

Moreover, the figure is expected to remain very high in 2023, as experts say, even reaching 3.5%. However, some banking institutions such as Bankinter believe that it will not exceed 3% for the whole year and, in 2024, it will recover apparently more normal figures.

Undoubtedly, the rise in this indicator, added to the increase in others such as the CPI, is increasing the pressure on Spanish households, which are facing a general increase in the cost of living. Without going any further, despite the fall in inflation in October, the underlying figure remained as high as the previous month, so there is no respite for families.

SOURCE: 20 MINUTOS