That new rate hikes The fight against inflation announced by the European Central Bank (ECB) last October has had a direct impact on mortgage holders. Rates have gone from 0% to 2% and consequently the value of Euribor has skyrocketed.
Euribor is the main reference indicator for calculating interest rates on adjustable rate mortgages in our country and in just a few months it rose from negative values to 2.626% in October 2022. Forecasts are not favorable and experts expect it to reach 3% by the end of this year, as described in HelpMyCash.
Increase in monthly installments for mortgage borrowers
Undoubtedly those who have taken out an adjustable rate mortgage are those most affected, but companies have already started to tighten the conditions for fixed-rate mortgages. As reported by the business newspaper Cinco Días, between 2016 and 2021 more than one and a half million variable mortgages were signed, which will have the greatest impact due to the increase in Euribor.
Between the same years, Euribor remained negative. “Price in negative values directly impacted the price of adjustable rate mortgages. In particular, their interest was lower because the bank had to add a value below 0% to the difference‘ they explain in HelpMyCash.
However, everything indicates that the index will not return to negative values for the foreseeable future. A situation that poses a real risk, especially for those who find themselves in a situation of greater vulnerability to the increase in their fees, which in certain cases have been more than 200 euros per month.
From iAhorro they explain that with this increase in Euribor and bank spreads of around 0.80%, Variable rate mortgage rates are around 3.5%. For older mortgages, the impact of Euribor increases will be less noticeable as part of the interest has already been paid and it will have a greater impact on those that have been formalized in recent years.