1.5 percent increase Euribor in just six months this horrified the Spaniards. variable mortgage For an average loan of 150,000 Euros over 25 years, this represents an increase of 85 Euros per month or 1,020 Euros per year; This is undoubtedly a very valuable amount for their families in an inflationary environment like the present one. Decreased purchasing capacity and memories of the past, such as those experienced in the 2008 real estate crisis, are returning.
“I don’t think Euribor will exceed 1.5% until at least the first half of 2023.“Confirms Gonzalo Bernardos, Professor of Economics at the University of Barcelona. On the contrary, he points out that the average rate of this index since 1999 has been 3.39%, so for the rest of the decade these levels were not visible again.
Josep Vera, business development manager of the Mortgages.com portal, also sends a reassuring message: “We are causing a lot of alarm and We are low interest because we reached 5% in 2006. We have been negative for 6 years and this is neither natural nor good for the economy,” he said. Since January 2016, the Euribor, the reference index showing the average interest rate at which European banks lend, has entered negative territory. This means that those who had debts in the last six years became the banks that reduced their installments instead of paying interest on the borrowed capital.
Euribor’s behavior linked to interest ratesPublished by the European Central Bank. Between March 2016 and July 2022 these remained negative; however, the explosion of temporary to permanent inflation forced the person responsible for the monetary policy of the Old Continent to react. For now, Christine Lagarde has announced that they will stop at 0.5%, but the market is already discounting an increase of up to 1% before the end of the year. Among those waiting for this situation are banks that find it dangerous to lend cheaply and raise interest rates.
With an increase of 1.5% from January to June, Euribor began to slow its climb to stabilize around 1%. Its maximum value is marked as 1.2% in July, forming a range between 0.8% and 0.8%. “Our guess is, Euribor closed the year below 2% and that’s a very attractive rate,” Josep Vera tells El Periódico de España.
This increase in Euribor will only affect variable mortgage holders. Rare Avis With the introduction of flat rate since 2016. Despite this, nearly 80% of those with mortgages are variable. This trend has reversed and in 2022 70% of the loans given have fixed interest rates.. Home buyers have taken advantage of unusually low rates to lock in an uncertain future. As to how much this will affect families, they tell Hipotecas.com that their main concern is inflation, and that it amounts to much more than a floating mortgage. “Some isolated families may have temporary problems paying, but it’s not like it was in 2008,” says the portal’s business development manager.
Professor Bernardos makes a final appeal to those with variable mortgages: “It is the penultimate opportunity to switch to a flat rate.. Anything below 3-3.5% fixed interest is good, below 2.5% is a bargain, and below 1.5% is a gift”. Bernados says “extraordinary, what has happened over the last decade will change sooner or later.” ” defines it as something fashion.
Increased mortgage cost
The rise in mortgage prices assumes worsening conditions of access to housing for those with less savings. The most affected group are young people, who in most cases have a permanent income, but rent prevents them from reaching an income to buy a house. Under normal circumstances, financial institutions require the buyer to have enough capital to cover 20% of the price and purchase costs such as transfer tax or notary public. Definitely, You need savings of between 45,000 and 50,000 euros to buy an average 200,000 euro flat.. “The current situation may affect smaller purchases or those farther from the city centre,” explains Vera.
At this point, Some regional governments chose to ally with banking.. The region of Murcia was the first to implement this with the Youth Guarantee program. Through this plan, the Murcian Executive guarantees 20% of the purchase, which is the amount the teenager should theoretically have accumulated. For this purpose, an agreement was reached with Bankinter, Banco Sabadell, Cajamar, Caja Rural Central and Caja Rural Regional; so that young people who prove financially capable can buy a house without saving any capital. Recently, the Community of Madrid announced a very similar plan of 18 million to guarantee people under 35 who want to buy their first residence for up to 390,000 euros. As far as capital is concerned, it will only be responsible for 15%, so the maximum to be financed will be 95%.