this 0.75% increase in interest rates Confirmed this morning. European Central Bank It puts more pressure on Euribor, Reference index for most variable mortgages in Spain. For those who hold floating rate mortgages and need a review, the increase in Euribor will translate into an average increase of 178 euros per month. The indicator closed at 1,913 this morning, compared to the 1,249 it pointed out in August. The increase indicates that the 150,000 euro floating rate mortgages to be reviewed this month will pay an additional 2,136 euros over the next twelve months.
April marked a turning point in the evolution of Euribor since the benchmark index. mortgage variables closed that month positive, something that hasn’t happened in over six years (January 2016). Banks were waiting for the European Central Bank’s (ECB) action to increase interest rates for the first time in 11 years, increasing by 50 basis points in July, the biggest increase in the last 22 years so far. Thus, the interest rate in the euro area was 0.5%. With the increase announced today, it remained at 1.25%.
After this move by the ECB, Euribor rose to levels not seen since 2009 in August and September. After six years of negative Euribor, the increase is making all floating rate mortgages more expensive. For example, let’s take a mortgage of EUR 150,000 on average over 25 years at Euribor plus 1% interest. Before the revision, the September 2021 Euribor was applied, the monthly installments of -0.492% came to 532.14 Euros. After review, The September 2022 Euribor, which will be around 1.9%, will apply, so monthly payments will increase to 710 euros, with an additional 178 euros per month required. and 2,136 euros more per year.
Euribor continues to rise its impact on the increasingly expensive fixed mortgage market. Fixed-term mortgage interest rates that banks have envied in recent years for floors where Euribor, the main reference in housing finance, is negative, already started giving ground to variables. The change in trend will not stop there, as the rise in money prices and the new trade policy of financial institutions predict that this will continue over time. The latest data from the Spanish Mortgage Association (AHE), of which the main banks are a part, confirms that last May and variable new operations grew eight-tenths from April, reaching 20.9% of the total. fixed interest methods decreased by the same rate and remained at 79.1%.
Deposit
Bad news for banking users using mortgages turned into good news for those with deposits for the same reasons. And the rise in interest rates will benefit their wages. Therefore, banks competing for funding, to be in a position to increase the fee for the deposit in the coming months.
The increase in mortgage payments contributes to the rise in inflation, which closed August with 10.4% and reduced the purchasing power of families.