To be more exact, on April 12, 2022 It was the first day of the month the euribor registered a positive dataspecifically 0.005 percent, something that had not happened since February 3, 2016. From there, on days 14, 21, 22, 25, 26, 27 and this Thursday 28, values of 0.003%, 0.017%, 0.084%, 0.134%, 0.111%, 0.109% and 0.118%, respectively, were registered. To see such high daily data, you have to go back even further: to October 15, 2015, when it also scored 0.134%.
This has made the Euribor has risen to 101.03% in one year: from -0.484% registered in April 2021 until 0,005% actual. In addition, in a single month it has increased 0.242 points, after the -0.237% that it marked in February 2022.
“This April we have seen, for the first time in six yearsa positive monthly average of the Euribor, which confirms its Change of trend. Since the start of war in ukrainemore than 60 days ago, we have seen very volatile movements”, analyzes Simone Colombelli, director of Mortgages at iAhorro.
Looking at the historical evolution of the Euribor, Colombelli does not believe that this indicator will continue to advance at the same speed in the coming months: “Something similar to what happened with the coronavirus is happening: we have already experienced the most abrupt changes in the Euribor and we could be reaching a certain stability. From now on we are likely to see more sustained, more stable movements.”
And it is that it was in May 2020, two months after the pandemic of the coronavirus forced strict confinement, when the Euribor marked the highest data of the entire year which, although not positive, did come very close to zero, with an average of -0.081%. However, in June everything returned to relative normality and, as a consequence, the Euribor began a new and drastic drop until ending that year at -0.496%.
Will we end the year hovering around 0.5 percent?
Colombelli prefers to be cautious with predictions that say we could end 2022 with the Euribor hovering around 0.5%, in positive. “Historically, in the Euribor there has never been a difference of more than half a point between the highest and the lowest data of the year; not even in 2020. And if we go back more years, the trend does not change”, recalls the director of Mortgages at iAhorro, who adds that “this year we have already seen a difference of almost 0.5 percentage points between the data for January and that of this April, so it is very difficult to reach 0.5% by the end of the year, when it would be reached a one point raise in the exercise as a whole.
Of course, Colombelli clarifies that this depends on the decisions that the European Central Bank (ECB) may take from now on. For now, its president Christine Lagarde has calmed things down by postponing at least until the third quarter of the year the raise interest rates by the entity. “Any adjustment of the ECB’s official interest rates will take place some time after the end of the debt purchases (scheduled for the third quarter of the year) and will be gradual,” Lagarde stated just a few days ago.
All this despite the fact that inflation continues to skyrocket and this month the forecast is that it will be around 8.4%, according to what the National Institute of Statistics (INE) has advanced this week. So what is the reason for the ECB’s decision? Colombelli explains that “possibly what they want is avoid maintaining more economic pressure on families. Europe is not used to these levels of inflation, and all financial and investment products are not parameterized to deal with them, so they may not want to adjust interest rates to inflation because it could have a negative impact on consumption,” he adds. .
Once these deadlines have been set and given the historical evolution of the reference index, the director of Mortgages at iAhorro also clarifies that “if the ECB does not want to tweak rates, it is very difficult for the Euribor to rise on its own until it reaches levels of 0, 5%”.
No drastic changes in bank offers
Six years ago, coinciding with the fall of the Euribor to negative levels, several products such as funds or deposits, which some time before were protagonists of the offers of all financial institutions, became practically dead. Can they resurface now thanks to the rise we are seeing in interest rates? “The mortgage has been the star product in recent years due to its good conditions, and it is still early to see a change in this regard,” says the director of Mortgages at iAhorro.
Regarding the current situation of the mortgage offer, Colombelli explains that, “until all banks raise fixed rates uniformly, a real change will not be noticed, and there are some entities that do not plan it.”
Of course, for this change to be noticed and effective, “the entire market has to raise the fixed-rate mortgage up to half a point, if they raise it less (for example, 0.1%, as has happened in recent months) nothing will change”, clarifies the spokesperson for iAhorro. Likewise, he declares that “in recent weeks, especially in March, there have been adjustments and possibly there will be some more, but, if the Euribor does not rise much more, the next changes will not be decisive in the short term. It could only happen if the bank wants to make a commercial strategythat is, if it bets on another product to position itself internally or to differentiate itself from other entities”
How much will the mortgage payment rise with this increase in the Euribor?
who has a contract adjustable mortgage the most normal thing is that you do a review of quotas annually. Therefore, the owner of a home who has to review this April the amount he will pay for the next twelve months for his mortgage, if it is 150,000 euros at 30 years with Euribor + 0.99%, will see a significant rise in the same: 32 euros per month or, what is the same, 384 euros per year. Thus, it will go from paying 449.18 euros per month to 481.18 euros of fee.
In the event that the mortgage loan amounts to a total of 300,000 euros over 30 years, also with a differential of Euribor + 0.99%, as of this month the monthly installment will be 962.05 euros for the 898.36 that you paid in April 2021. In this case, the increase is 63.66 euros per month and 763.92 euros per year.
iAhorro has made an estimate of how much more expensive the mortgage could be if it reaches 2023 with a 0.5% Euribor, in addition to seeing what would happen if this indicator rose to 1% or even 1.5% in the next exercises.
Compared to the situation we saw in April 2021, the installment of a variable mortgage of 150,000 euros over 30 years and referenced to Euribor + 0.99% would rise to 130.41 euros per month over the years and if the index of reference will go from -0.484% to be in the worst of the scenarios, 1.5% in 2025. Likewise, that rise would be double for a mortgage of 300,000 euros: up to 260.83 euros in just five years.
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