Summer is expected Euribor increase in interbank borrowing rates, which may also increase the amount of housing loan payments to many households, reports the Central Bank of Lithuania and broadcaster LRT.
Mortgages usually have a monthly payment, which consists of a repayment of the principal and a fixed interest rate set by the bank, as well as a part of the variable interest rate. For instance, Swedbank requires payment of a variable rate after six months Euriborwhich has been negative for some time. This situation has been linked to the support of the EU banking system by the European Central Bank. A negative rate for borrowers has long meant a variable part of the monthly payment of 0%. If any of Euribor rates will rise, so will the monthly payment to a large proportion of mortgage borrowers.
The Bank of Lithuania estimates that in Lithuania 98% of mortgage borrowers have a variable interest rate of three, six or 12 months. Euriborwhich is also recalculated every three, six or 12 months respectively.
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Those who have a loan with 12 months Euribor rate, a small part of the variable rate must already be paid.
In the middle of May 12 months Euribor was 0.31%. This means that when recalculating the loan, the bank’s margin must be added Euribor. For example, if a person has a loan of 100,000 euros for 30 years with a fixed bank rate of 2%, then he has paid 369 euros a month to the bank so far. Euribor With the 12-month rate rising by 0.31%, the monthly payment has risen by around € 16 and will now be € 385.
Financial markets have been forecast for six months Euribor will reach about 1% in December and 2% at the end of 2023. Accordingly, it can be assumed that the monthly loan payment will increase for a large number of households in both Lithuania and the Baltics in general, reports LRT.
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