euribor closed August 2022 reached 1.25%, the highest recorded since May 2012 at 1.266%. The new increase in the variable mortgage reference index was consolidated especially in the last three days of the month and its values well exceeded 1.5%: it reached 1.612 on Monday, 29 August, and 1,758 on Tuesday 30. It rose again on Wednesday, 31st, to 1,778%, the highest daily figure since January 25, 2012.
In this way, the increase pointed out by Euribor in the eight months we are in 2022 is the highest increase seen in a full year as it exceeds 1.72 percentage points between January 2022 data (-0.477%) and current data. a.
“This is totally abnormal for Euribor, whose values usually don’t change by more than half a percentage point in a year,” explains Simone Colombelli, director of Mortgages at iAhorro. “We are going through a lot of changes in the mortgage market,” he said.
But Colombelli said, “This shouldn’t alarm us, we’re just getting back to normal; What was not normal was what happened a year ago”. In addition, a spokesperson for iAhorro predicts that “if everything stays the same, it is likely that Euribor will continue to rise in the coming months.”
How much does the fee increase with an annual review? mortgage?
This is bad news for those taking out mortgages with variable credit, as they will continue to see their mortgage payments continue to rise. For example, if they had to do the annual review this August, where Euribor is now at 1.25%, the person entering into a variable mortgage contract of €150,000 over 30 years with a margin of 0.99% + Euribor will see how your payment will increase. Up to 120.03 euros, that is, from this review you will go from paying 448.26 euros per month to paying 568.29 euros. This represents an increase of 1,440.36 euros per year.
With the same conditions, that is, with a 30-year repayment period and a difference of 0.99% + Euribor, if the mortgage loan amount is 300.000 Euro, the installment increase will be 240.06 Euro. that is, he would have gone from paying 896.52 euros per month to paying 1,136.58 euros per month for the mortgage. In this case, the annual increase would be 2,880.72 euros.
Fixed rate mortgages up to 3%
For mortgage seekers, the trend will continue as it has until now: The differential of variants that banks will offer will be stable and may even continue to drop a little more. “We already find variable mortgages with 0.5% + Euribor margins for most solvent profiles,” Colombelli says.
Fixed mortgages, on the other hand, have experienced “widespread increases” and will likely continue to rise: “We were between 2-2.5% and in some cases it’s possible they could reach or even exceed 3%,” he said. iAhorro said, “If it were for me, I wouldn’t sign a fixed rate loan now unless they offer me very good terms. In other words, if I had to choose between fixed, variable and mixed, I would take a mixed interest loan.”
The reason claimed by the Mortgage director of comparator and mortgage advisor is that “you can see mixed mortgage offers where the portion subject to a flat rate (first 7-10 years) is more competitive than a fixed mortgage 100% and also when you reach the variable tranche you want to switch to Euribor status, you can do this you can do it without any problems”.
About 2% at the end of the year?
They got a forecast from the comparator and mortgage advisor on how Euribor could end this year. On the one hand, when we consider the change in the data from January to today, we see that the average increase in Euribor is 0.2 points every month, so that 2022 can end around 2% with this indicator. But Colombelli assures us that “if we see the trend of other years, it will slow down Euribor’s growth a bit in the last quarter”.
So they also took the average change from iAhorro for the last three months, which has been just over a tenth of a month since June, to try and get a slightly more accurate estimate of that fact. In this way, 2022 could close with an Euribor close to 1.6%.