After 16 months of declines and almost six years of minor fluctuations, mortgage associated with euribor Last January, it embarked on an unprecedented path of upward revisions since 2010. inflation due to the end of the pandemic and, above all, its impact on energy prices occupation of Ukraine by Russia It explains this increase in loan payments, which will further reduce the disposable income of households.
Why are mortgage payments getting more expensive?
Despite the strong growth of fixed rate mortgages (whose installments do not change over the life of the loan) in recent years, loans to buy homes at variable rates (variable mortgages) remains the majority in Spain. The interest for the majority of these is normally reviewed annually on the basis of 12-month Euribor plus a spread (a percentage added to that Euribor). In the month that serves as a reference for review mortgage If the euribor is higher than a year, the fee will increase. And vice versa: if it is lower, it will be reduced. The installments are increasing because since last January the monthly Euribor is higher than it was twelve months ago. Moreover, it is an accelerating trend.
Why is Euribor rising?
This euriborIt turned negative in 2016, predicting that the European Central Bank (ECB), which theoretically measures the interest banks charge each other to lend money, will reduce reference interest rates to their historical minimums (zero or negative values ​​as the case may be). to stimulate the eurozone economy. Last December, it fell to -0.502%, the second lowest level in its history. It has since risen at a diabolical rate and closed April positive (0.005%) for the first time since January 2016. Thus, the index expects the tightening of monetary policy, which the ECB has started to fight against high inflation.
How much will the ECB raise interest rates?
The euro zone monetary authority began to tighten its monetary policy, announcing in December that it would reduce public and private borrowings. In addition, the occupation of Ukraine accelerated the decrease in the said purchases and opened the door to interest rate hikes. Vice President Luis de Guindos recently pointed out that this could be July, September or “later”. Market consensus now expects two increases in deposit facility (the interest the ECB charges from banks to hold their money) by 0.25 percentage points this year (one in summer and one at year-end) from -0.5%. up to 0%. For 2024, four increases in the response rate to around 1% are expected, although there are those who see it as 1.5%.
How long will the mortgage go up?
The market expects euribor It will increase every month in the coming years until it reaches 1.52% in December 2024. That’s a forecast that changes from day to day, depending on what analysts and investors expect inflation to do and the ECB’s response. But in any case, market prospects give an idea of ​​some years of increase in mortgage payments, whether high or low. The era of ultra-low rates seems to be over.
How much more will I have to pay?
According to current market forecasts, those who will experience the most increase will be those who have to review their Euribor referenced loans for the next December and January and February 2023 as they will be applied an increase of more than one point. . differential. During those months, Euribor’s inter-year differences will reach the peak and then moderate to 0.23 points in December 2024. for reference, it will be between 1.8 percent and 2 points plus differential. For a mortgage of 150,000 euros over 30 years and a difference of 0.99%, this means paying between 135 and 150 euros per month, more than now, an increase of 27% to 30%.
Source: Informacion
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