Euribor rate is rising again, but growth in annual mortgage payments continues to slow

Braking on a descent Euribor. There is one day left until the end of the month, the index of which is about 3.5 out of five million mortgage Spain aims to end February with monthly average 3.666%above 3.609% in January, which will break negative trends which he undertook after reaching the maximum 4.16% in October. However, loans from annual report who use February data as a reference (usually those updating quotas in April) will record smoother rise compared to what those using the Euribor rate experienced in January 2022, while mortgages with semi-annual review (30% of the total) will enjoy third descent consecutive payments.

Thus, the Euribor rate fell significantly between November and January due to expectation market that the European Central Bank (ECB) was forced pass He cut belonging Guys official interest rates due to the strong weakening of the eurozone economy, which was accompanied by reduction in inflation faster than expected. However, the monetary authorities seem to convinced investors In recent weeks, it is more likely that a cycle of devaluation of money will begin. in summer than in spring. This was felt in the Euribor index, which measures the average rate at which banks lend to each other: according to daily data, February began 3.5% and it ended up hanging around him 3.75%.

Ups and downs

Despite the increase in the Euribor rate, fees subject to annual review They will continue to moderate. For a mortgage 150,000 euros at 24 years old At Euribor plus 1%, based on February data, the monthly payment would be between from 855 to 866 euros, that is, 11 euros more per month and 132 euros more per year. For loan 300,000 euros with the same characteristics, the increase will be from 1711 to 1733 euros, which means 22 euros more per month and 264 euros more per year. On the other hand, for those who semi-annual reviewthere will be a fall from 901 to 866 euros and from from 1803 to 1733 euros in the two mortgages used as examples.

The one who is laid up, yes, will receive a softer blow or a slight relief, but in both cases this will happen in relation to the blow is your internal finances which fit into last two years. The €150,000 portions of the loan used as a guide have been revised to €563 (annual review) and €552 (half-yearly review) based on February 2022 data. In two exercises there will be increased by 303 and 314 euros per month, respectively. That is, they will be 54% and 56% more expensive.

Moderation

Rates increase if Euribor higher than a year or six months ago in the month that serves as the starting point for the credit check, otherwise they are reduced. The reason that quota increases are slowing or decreasing, as the case may be, and despite the slight increase in Euribor in February, is that the new Euribor levels are compared with the previous year’s levels. February and August 2023 (3534% and 4073%). Thus, Euribor started last year at 3.337%, reached 4.16% in October, and then fell to 3.679% in December.

Compared to February last year, the internal annual difference, which serves as a benchmark for mortgages with annual review, will now be 0.1326 pointsthe lowest figure since January 2022. For semi-annual reference loans, the reduction compared to Euribor in August last year will be 0.4064 points. For comparison: the annual difference has reached its maximum. 3884 points in March last year.

ECB under consideration

Despite the rise in February, the major research services publishing Euribor forecasts believe the index will continue to decline in the coming months. Bankinter It is expected to fall to 3.25% next December and to 2.75% at the end of 2025. KaishaBankIn turn, it estimates it at 3.06% and 2.45%, respectively. AND Funcas forecasts it will decline to an average of 3.27% in the fourth quarter of 2024. If so, an annual review of mortgage payments may start going down with March or April indices.

All this, of course, depends on what ECB with base rates, the movements of which Euribor tries to predict. Your President, Christine Lagardeset a deadline a few weeks ago – summer– for possible first rate drop interest in the eurozone after the inflationary crisis of the last two years. That is later than expected market (spring). And with some more nuances: this is not an obligation, it’s only “probably”and will depend on what is not negative surprises on track to reduce inflation due to factors such as wages, business profitability, energy prices and global supply chains.