The slight drop in the Euribor in the month of August has already been forgotten. In fact, it could be defined as a mirage or even an index vacation. This Wednesday, the Euribor reached 4.216% in its daily rate, that is, it exceeded the level of 4.2% for the first time since 2008. This increase has made the monthly rate stand at 4.109%, three tenths above from the end of August, but still slightly below July (4.149%). This year, the increases are being lighter, but there are still some. This means that the price of the mortgage increases by 1,000 euros more per year.
Variable rate mortgages are reviewed every 6 or 12 months. If the mortgagee has it every 12 months and has to review his loan in September, he will do so with a Euribor of 4.109%. That is, if you took out a variable mortgage in 2008 with Euribor +0.99% for a value of 150,000 euros, The mortgage payment will have increased by 80 euros per monthup to 673.41 euros, which in the entire year would amount to 960.19 euros per year.
However, those mortgaged who have a review this September will be the second round, so the money that has increased on this occasion must be added to the amount from the previous year. In this way, if the fee paid in September 2021 is taken as a reference, when the Euribor was still negative (-0.49%), Mortgaged people pay 191.44 euros per month more than two years ago, That is, almost 2,300 euros more per year than in 2021.
The variation in the mortgage payment depends on when it is time to review the loan and how old it is. This part must be emphasized, since the way of amortizing the mortgage in Spain is through the French method, with which more of the taxes are paid at the beginning of the life of the mortgage and more capital in the later years. That is, the rise in the Euribor will affect recent variable mortgages more than older ones that have a smaller amount to amortize.
The Euribor had 20 months of consecutive increases until the month of August arrived, a traditionally holiday month, and closed with a slight drop, but which this September has already forgotten. These advances have had an impact on variable mortgage holders, who have seen their payments increase significantly. Many of these affected people have renegotiated their loans with their banks, since as the directors of the entities say: “We are not interested in keeping the apartments, that is why we want to solve the problems with the mortgages.”
However, in recent months, many of those who want to renegotiate mortgages remain on their variable loan with the perspective that the Euribor will fall again, since the change to a fixed one turns out worse, due to the interest on this product have also risen strongly.
In CaixaBank They have carried out 3,500 novations to fixed mortgages in the first half of the year. The entity points out that it is not a very high figure due to the mortgage market share they have and because in the same period 40,000 new mortgages were signed.
In the same period, it agreed to 2,000 refinancings and other mortgage loan payment agreements to alleviate customers’ mortgage burdens. These 2,000 refinancings increase to a total of 10,000 if the data are taken since the path of rate increases undertaken by the European Central Bank (ECB) to stop inflation began.
In the case of Bankinter They assured in the presentation of results that there is no “relevant” activity being recorded in loan renegotiations or even in mortgages that come from other entities. However, Héctor Grisi, CEO of Banco Santander, did assure that they are carrying out quite a few one-to-one refinancings, that is, in a personalized way. But he clarified that the performance of the portfolio is being good and that the cost of risk has not increased, since many are taking advantage of part of their savings to amortize the mortgage. In the first semester, Banco Santander customer repayments rose to the range of 250-300 million euros per yearfive times more than normal.
These renegotiations are taking place outside the Code of Good Practices that was approved in November 2022 due to the rapid rise of the Euribor and because many families could find themselves in a complicated situation. According to the latest data from the Ministry of Economic Affairs, the code has received 33,000 applications as of June, of which 40% are being processed. In addition, there are some 29,000 mortgage loan renegotiations. Family units with incomes of less than 29,400 euros per year and whose mortgage payment is greater than 30% of net income can join this code, which is still in force.
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