The Euribor has given a stretch in its daily reference to go from 3.96% to 4.02% and situate itself at its highest level since November 2008. The index with which most mortgages in Europe are calculated continues its escalation encouraged by the ECB’s decision yesterday to raise interest rates by a quarter of a point, up to 4%.
With the latest increase, the still provisional average of the Euribor so far in June stands at 3.92%. The current level is already more than four points apart from the references of a year ago, in the biggest year-on-year rise in this indicator since the entry into operation of the euro. The highest level was reached in October 2008, reaching 5.5%.
If the level reached today stabilizes in monthly terms, an average mortgagee will end up paying 3,768 euros more for their loans than before the start of the rate rises. According to the calculator of the Spanish Mortgage Association (AHE), an average mortgage of 150,000 euros at 25 years with a differential of one percentage point will have gone from 565 euros before the rate increases to 879 euros.
The impact of the increases is directed at the 3.7 million active variable-rate mortgages in Spain, which are the majority of the 5 million existing loans of this type, according to calculations by the Bank of Spain. The institution estimates that practically all of them have already undergone some revision, although the most significant increase is yet to come.
The Euribor reflects market expectations and, just as in March it suffered a sudden drop of half a point due to the banking uncertainty caused by Credit Suisse, now it rises after the ECB hinted yesterday that it will not only raise rates up to 4 .25% in July, but there is still a long way to go.
“The market still expects some additional rise in interest rates, but of a maximum of 50 basis points over the next few meetings,” considers Alfredo Jiménez, from the Spanish Institute of Analysts. “Currency tightening continues,” he adds.
The increases in the Euribor will foreseeably be followed by an environment of tightening of financial conditions after the summer. “While households have still been little affected by the credit crunch, it is likely that they will be more pronounced after the holidays,” says Patrice Gautry, chief economist at Union Bancaire Privée.
With regard to the Euribor, iAhorro has been forecasting for some time that the reference indicator for mortgages would reach 4% in the summer and would tend to stabilize at those levels. The forecast is that, from that moment and although more slowly, some kind of moderation will begin.
In a report published today, Idealista calculates that the mortgage payment has grown by 46% since 2019 and that the savings necessary for the entry of a mortgage have increased by 21%, up to 42,300 euros.
The average cost of a ticket for a two-bedroom home in Spain was 34,906 euros in May 2019, while in May 2023 it stood at 42,293 euros, the report says.
“The situation for potential buyers continues to get complicated. On the one hand, rate increases are having a direct impact on the mortgage market, making loans more expensive. Meanwhile, prices continue to grow and demand a greater volume of savings,” he points out. Idealistic.
