New rise in Euribor. The benchmark index for variable mortgages stands at 4.145% in the absence of a single day of data to cover the September 2023 average; This is above the value recorded in August (4.073%) and very similar to that of July (4.149%). Let’s recall that this indicator recorded a slight decline last month, but apparently this is just a mirage.
The European Central Bank’s (ECB) increase in official interest rates to 4.5% on September 14 means that Euribor has no choice but to continue rising: “Euribor is forced to follow him after the incident interest rates civil servants“This is already 35 basis points higher,” explains Simone Colombelli, Mortgage Director at mortgage comparator iAhorro.
What will happen in the coming months? Colombelli makes it clear that “we will soon reach a monthly average of 4.2%” and that “once we exceed the 4.2% average, the next hurdle that will not take long to reach will be 4.5%.” In fact, a spokesperson for iAhorro says: “The most likely thing would be to end the year with Euribor around 4.5% if the ECB does not touch interest rates again next quarter.”
Installments of variable housing loans continue to increase
However, the fact that Euribor continues to rise, albeit slowly, is not good news for mortgage holders, especially those with high credit scores. variable interest loan, they continue to see how their wages accumulate with several successive increases through revisions.
For example, a person hired Variable mortgage of 150,000 Euros with a 30-year repayment period and an interest rate of 0.99% plus Euribor, and you have to do the annual review of your quota every September, you will see how last year there was an annual increase of more than 2,300 euros, now you will have to add another 1,940.36 euros. Specifically, your fee will increase from 650.59 euros to 812.55 euros, representing a monthly increase of 161.70 euros.
These increases in prices are causing new owners to almost completely ignore the variable option on their mortgages. But it’s not just these products that have become more expensive, causing the mortgage market to go through a strange period: sales are down, but request to own a house and housing prices continue to rise.
Considering this situation, iAhorro’s Mortgage manager explains: “House prices should fall in some regions in the next quarter. “If sales continue to decline, it is almost unthinkable that prices will continue to rise.” However, it is also true that he said: “In major cities like Madrid or Barcelona we could see stability rather than a decline in prices”. Of course, Colombelli guarantees: “For a 100% recovery of the real estate and mortgage markets, both house prices and mortgage loan interest rates must fall in the medium term; “We cannot maintain the current situation for much longer.”
There are still fixed mortgages below 3% TIN and mixed mortgages around 2% TIN
Regarding the offers offered by banks to existing mortgage holders, as detailed by mortgage comparator iAhorro, ““We can still find pretty good products for the moment.” Specifically, its spokesperson notes: “We have some fixed mortgage offers around 2.6% NIR and on blended mortgages these are closer to 2% NIR for the first five years.”
It is also often said that the last quarter of the year is one of the best periods to get a mortgage because financial institutions improve their commercial offers to attract the largest number of customers possible and thus achieve the annual targets they set in January. To get good interest rates, Colombelli concludes: “Now more than ever, it is important to analyze and compare all possible offers in detail to find the institution that best suits your profile.”