The bad news for Bursa continues. mortgaged. This year will end with the main reference, Euribor. mortgage variable rate, about 3%It rose more than seven times the previous year, following the European Central Bank’s (ECB) price hikes this year to curb inflation.
After closing 2021 at -0.502% and returning to positive ground after six years last April, this year will end at around 3%, at: They haven’t seen each other since 2008when the financial crisis broke out. Currently the daily rate exceeds 3.2% and the monthly average is close to 3%.
As a result of this development, the Government agreed with the bank. Measures to help vulnerable mortgagee families It is estimated that it will benefit approximately one million households. All this was approved in Congress last week. As Vice President and Minister of Economy Nadia Calviño recalls, treatment for around 350,000 families has been improved, but a new temporary framework of action has also been opened. More than 700,000 middle-class families ‘at risk of vulnerability’.
This evolution of the main reference for mortgages caused a significant change in the mortgage market. With the rise of flat rate, which accounts for two-thirds of start-ups and third, variables according to October data from the National Institute of Statistics (INE). In any case, the constants, whose main increase has been since July of last year, are losing weight after reaching 75.4% of the total in July of this year. According to the INE, the average initial interest rate is 2.03% for mortgages on variable rate homes and 2.74% on fixed rate homes. In fact, banks are increasing their variable mortgage offerings to make them more attractive and to get more margin.
At current levels, a mortgage of about 150,000 euros A 24 year old Euribor and it would be more expensive by a margin of 1% around 265 euros per month and more than 3,300 euros per year, relying on the current average that caresses the 3% plus difference. The underlying problem is that Euribor is currently close to 3% on average and has already surpassed it at the daily rate, and a year ago it was negative: -0.502%. Hence these increases.
In general, experts note that: euribor will continue to rise in 2023, although in a more moderate way. In any case, everything will depend on the policy the ECB maintains regarding interest rates. If the war in Ukraine continues and the upward trend in inflation continues, the monetary authority of the euro zone will continue to increase the price of the currency because its aim is to bring it to around 2%. On the other hand, if the conflict eases and prices moderate, the ECB may take its foot off the accelerator.
Estimates vary and range from an Euribor where interest rates currently at 2.5% could reach 3.5%, to those predicting it could reach 4%. The massive and unprecedented increase in Euribor is making all-year variable rate mortgage payments more expensive (not fixed rates, it doesn’t).
But the worst is yet to come for mortgagers, analysts say. Since last November, revisions will be made in the type that will be worth 3% and will exceed 3%. (plus the difference signed when the loan agreement was made), some very strong increases that will last about a year. According to industry sources, the biggest increases will be concentrated in the first half of next year.
Although there are variable rate home purchase loans that are reviewed every six months, most do so once a year. And in these reviews, the installments rise if the Euribor in the month is higher than the previous year, which serves as the reference for updating the interest rate on the loan. The reason why the biggest increases start in October and increase rapidly in the coming months is because Euribor, normally two months ago, is used as a reference.