The linked index to Euribor shows a backdrop of rising and stabilizing mortgage costs in Spain. Euribor has hovered around 4.0% in recent months, marking the second autumn with notable movement after a long period. In August, it peaked as the highest level since July 2020, and the index has since accumulated about 4,662 points in some reporting. The percentage changes moved from a low of -0.502% in December 2021 to about 4.149% in October, reflecting unprecedented increases over the last 22 months. Loans that require review in November, typically inputs for adjusting monthly payments, are expected to show a softer rise. From the experience of Euribor users since May of the previous year, a moderation appears likely to continue into the coming months.
In practice, wages may grow more slowly, yet gains will persist in the near term. For a mortgage of 150,000 euros amortized over 24 years with Euribor plus 1%, the November reference shows a move from 796 euros to 897 euros per month. That is 101 euros more each month, or 1,212 euros more per year. For a loan of 300,000 euros, the feature set points to an increase from 1,593 euros to 1,795 euros, an extra 202 euros per month and 2,424 euros annually.
For those already carrying mortgages, the impact may be less dramatic but still adds to the pressures seen over the last year. A look at two representative loans used as benchmarks shows November 2021 payments of 553 euros and 1,107 euros per month, respectively. If those loans follow the same path, monthly payments would rise by 344 euros and 688 euros over two years, meaning roughly a 62% increase in monthly costs.
Moderation
Many variable-rate mortgages review annually, though some adjust every six months. When Euribor trends higher than a prior figure, annual reviews can push rates up again. The wage growth scenario tends to temper the balance, and the new Euribor levels are expected to sharpen this effect in the months ahead. Compared with late 2022, current projections show Euribor moving from higher levels earlier in the year toward more moderate readings later on. Earlier, Euribor started that year at -0.477% in January and rose to a peak near 3.018% in December.
Last November, the index stood around 2.828%. That difference becomes a substantial annual shift of about 1.199 percentage points. Put differently, year-over-year changes have ranged from roughly one to three percentage points in this period. The peak in October 2022 reached around 3.1 points, and by March of the current year the total maximum approached 3.884 points. Since then, rate increases have moderated, with November bringing levels near the lowest point since May 2022.
Declines against the ECB
Industry forecasts for Euribor suggest that the index may have topped out and could begin to ease in the coming months. Analysts project average levels around 4.1% this year, 3.9% next year, and 3.4% in 2025. For its part, CaixaBank predicts around 4.08% by December and 3.06% by year-end 2024. Funcas pegs the fourth quarter of 2023 at about 4.12% and forecasts 3.64% between October and December next year. If such trends hold, mortgage payments should soften in the years ahead, with a potential decline starting around the second quarter of next year.
The overall path hinges on central bank signals. The European Central Bank, as the reference rate authority, has paused further rate hikes and signaled no immediate increases unless inflation accelerates unexpectedly. The timing of currency movements and inflation will largely determine how quickly Euribor declines. Market expectations point to possible reductions in the second half of next year, but the central bank has offered little detail on exact timing.