The Euribor rises in May to 0.287% and continues to make mortgages more expensive

MADRID, 31 May. (EUROPA PRESS) -

The twelve-month Euribor has registered a new monthly increase and has closed May at 0.287%, after having left behind the negative terrain in April for the first time in more than six years, which will lead to an increase in the price of variable mortgages referenced to this index.

The Euribor, anchored in negative territory since 2016 by the ultra-expansive policy of the European Central Bank (ECB) to underpin the recovery in the euro zone, continues its climb after the change of discourse of the European body, which will soon raise interest rates to cope with escalating inflation.

The president of the ECB, Christine Lagarde, has recently revealed that the meeting of the Governing Council of the entity scheduled for next July will be the right time to undertake the first rise in interest rates in the euro zone in more than a decade.

Lagarde has pointed out that, based on the current outlook, the agency is likely to be in a position to leave negative interest rates behind by the end of the third quarter.

This normalization of monetary policy has led the Euribor to chain strong increases since the beginning of the year, going from closing December 2021 with a monthly rate of -0.502% to marking a positive value of 0.013% last April.

This Tuesday, the last day of the month, it has registered a daily rate of 0.390%, which gives an average of 0.287% for the month of May. If the Bank of Spain confirms these data, it will mean a rise of 27 basis points in the month and 76 basis points compared to the -0.481% recorded a year earlier.

The twelve-month Euribor is the main indicator to which variable mortgages in Spain are referenced. Consequently, its rise is accompanied by an increase in the installments paid by the mortgaged.

If the index closes May at 0.287%, a 20-year mortgage of 150,000 euros with a spread of Euribor 1% that is subject to review will experience an increase of 51 euros per month in its monthly installment or, what is the same , of 613 euros per year.

Predictably, this increase in variable rate mortgages will continue to increase. Bankinter's Analysis Department estimates that the Euribor will close December 2022 at 0.4% and December 2023 at 0.8%, while CaixaBank analysts point out that the index could reach 1% next year.

The director of Mortgages at iAhorro, Simone Colombelli, points out that the year 2021 could end with a Euribor of around 1.35%. "These calculations are simply a mathematical estimate, but, if they are true, we would end the year with data from 2012, when Spain was still emerging from the economic crisis of 2008", she pointed out.

Despite the increase in the mortgage payment, the iAhorro expert points out that those who had a variable-rate mortgage have benefited for a whole year from a very low Euribor, which is returning to its most usual terrain.

"What they have experienced in 2021 has been an exceptional situation, they have enjoyed good conditions for 12 months, but what they are experiencing now is not catastrophic either: if they continue to have an interest rate that is around 1%, this is still very good compared to what we experienced years ago", Colombelli analyzed.

In any case, more than half of the mortgages that have been signed in recent years have done so at a fixed rate, which should reduce the impact of fluctuations in the Euribor. In fact, the data released last week by the National Institute of Statistics (INE) shows that 72.7% of mortgages on homes that were constituted in March were signed at a fixed rate and only 27.3% at a variable rate. , so that three consecutive months are chained in which fixed-rate mortgages exceed 70%.

In this scenario, financial institutions are readjusting their portfolio of mortgage products, which in recent years had focused on offering the best fixed-rate mortgage offer. Thus, banks are betting on reducing the differential of variable mortgages and making fixed rates more expensive.

"With the rise in the Euribor, financial institutions are going to begin to position themselves in environments prior to Covid-19. Little by little, they are placing their offer of fixed rates at around 2%, a figure that was very common in years 2017 or 2018, but that is almost double what we saw in 2021", pointed out the director of mortgages at iAhorro, who highlights that you can still find fixed-rate mortgages "good below 2%".

Along the same lines, from HelpMyCash they assure that, with fixed-rate mortgages, the client will earn with peace of mind and independence in the face of the rises and falls of the indicators, the 'in extremis' statements of the central banks and the rest of situations that affect to the market. In addition, they point out that there are still those who are offering fixed mortgages at 2% or below, which "is still a good deal."

In its ranking of the best fixed-rate mortgages for May, HelpMyCash highlights the fixed-rate mortgages from Evo Banco (1.94% APR), Targobank (1.67% APR), Ibercaja (2.21% APR), Openbank (2, 37% APR) and Santander (2.36% APR). These rates apply only to customers who meet certain requirements to obtain a bonus.

For this reason, HelpMyCash analysts assure that changing a fixed mortgage to a variable one, at this time of economic uncertainty, "is a mistake" and is only convenient for clients who request a very short-term mortgage or who know that they can cancel it soon. .

"A variable mortgage makes sense only and exclusively for a type of person with sufficient purchasing power to assume high installments that allow them to pay off the loan as soon as possible. Only in this way can they reduce the effect of future rises in the Euribor on their monthly payments, because he will have already paid a good part of the money he owes", they explain.

HelpMyCash experts do encourage those users who still have enough time to fully pay off their debt to change the variable mortgage to a fixed rate, despite the fact that with the new fixed installments they will probably pay more than what they had been doing with its variable rate, as a result of the fact that the banks are increasing the interest of the former to encourage the contracting of mortgages at a variable rate, with which they will earn more in the face of the rise in the Euribor.