After more than six years of negative Euribor values, the indicator crossed into positive territory again this April, marking a notable turnaround. It rose by 101.03 percent over the past year, moving from minus 0.484 in April 2021 to around 0.005 in the current month, with data for Friday yet to be released by the Bank of Spain next week. The month also showed a gain of 0.242 percentage points, following a decline of 0.237 points in February 2022.
The main driver of this sharp rise is the positive daily data from the variable mortgage reference index, which reached its highest level since October 15, 2015, when it stood at 0.134 percent. This April marks the first time in six years that Euribor has posted a positive monthly average, signaling a shift in trend. Since the onset of the conflict in Ukraine more than two months ago, markets have experienced heightened volatility, according to Simone Colombelli, Mortgages Manager at iAhorro [Citation: iAhorro Mortgages].
Euribor’s Evolution.
What are the consequences of this rise?
For a consumer with a variable-rate mortgage of €150,000 over 30 years, assuming a Euribor plus a 0.99 percent margin and an annual review this April, the monthly payment would increase by about 32 euros over the next year, totaling roughly 481.18 euros per month, up from about 449.18 euros. That amounts to an annual rise of approximately 384 euros. In total, the yearly cost would reach around 5,774 euros when including the new monthly payments, compared with the previous year’s schedule.
In a scenario with a €300,000 housing loan over 30 years, and the same Euribor plus 0.99 percent margin, the April payment would rise from about 898.36 euros to approximately 962.05 euros. The monthly increase would be about 63.66 euros, equating to an annual rise of around 763.92 euros.
When it comes to fixed-rate mortgages, several lenders have adjusted rates upward. Yet Colombelli notes that unless all banks raise fixed rates in unison, the real impact may be muted for a time. Some institutions have indicated they do not plan to implement uniform increases. Recent weeks have seen adjustments, with March being particularly active. The next changes will likely depend on the lending institutions’ commercial strategies, including whether they promote other products to differentiate themselves, says the mortgage manager at iAhorro [Citation: iAhorro Mortgages].
What is the forecast for Euribor in the coming months?
Historically, a mortgage expert explained, the difference between the year’s high and low Euribor has rarely exceeded half a percentage point. Not even in 2020 did the spread widen substantially. Looking further back, the trend appears persistent, with the current year already showing a gap close to 0.5 percentage points between January and April. Forecasts suggesting a year-end level near 0.5 percent seem unlikely given the trajectory observed so far, even as some analysts anticipated higher levels later in the year.
Colombelli adds that a situation similar to the early pandemic period is possible, with rapid shifts giving way to greater stability. The expectation is for movements to become more sustainable and less volatile moving forward.
The outlook remains cautious and closely tied to the decisions of banks. The European Central Bank is also a key factor. ECB President Christine Lagarde has delayed any rate hike adjustments into at least the third quarter, despite inflation running around 8.4 percent this month. Of course, inflation remains elevated, even as it shows a slight easing from March figures.
Overall, analysts stress that the path Euribor takes will hinge on central bank policy and bank-level strategies. Market participants will watch whether lenders align on fixed-rate adjustments or pursue other product-driven differentiators. In the meantime, borrowers with variable-rate loans should prepare for ongoing updates as new data flows from financial institutions and regulators continue to arrive.
The evolving situation underscores the sensitivity of mortgage costs to European monetary policy and geopolitical developments. As lenders recalibrate, borrowers feel the impact in their monthly budgets, prompting a careful review of loan terms and potential refinancing options. Subtle shifts in Euribor can translate into meaningful changes in annual housing costs, reinforcing the value of staying informed about rate movements and lender practices.
For now, the central bank environment remains dynamic, with stakeholders awaiting future guidance from the ECB and continued commentary from market analysts on how these rates will resonate through consumer lending and housing affordability in the months ahead.