Tancrede de Pola (OP Columnist)
THE Bank of Spain has confirmed that the 12-month Euribor closed July at a monthly average of 0.992%, compared to 0.852% in June.
This continues the trend of rises that began at the beginning of 2022, although the rate of increase has started to slow. But as inflation stays high, it is likely that Euribor – the base lending rate against which loans are calculated – will continue to rise.
The rise in the Euribor is 1.483 points compared to a year ago, when it stood at an average of -0.491%.
Overall in July, it increased by 0.14 points, although the headlines were grabbed when the European Central Bank hiked it to 1.2% on July 22 before it fell back below the 1% mark at the end of the month.
As mortgage rates are set according to the Euribor, the result of these rises will be more expensive mortgages – although they are still comparatively cheap compared to the double digit interest rates seen in the 90s.
Nonetheless, those on a variable rate mortgage will have to dig deeper into their pockets when their annual or six-monthly review is calculated.
For example, a 30-year variable mortgage of €150,000 will cost €90.28 a month more, assuming a Euribor of 0.99%.
According to Bankinter’s Analysis Department Euribor will be 1.90% in December and 2.20% in 2023, although other analysts are not quite so pessimistic.
Of course, the above figures apply to those on variable rate mortgages. There are other options that help buyers budget with more certainty, in particular fixed-rate loans, which are very popular although, since the new European Mortgage Directive was introduced, these are not generally available to non-euro earners.
It may be wise to sign up now while rates remain low. Some banks stopped offering fixed rates for a short while but are reintroducing them now at higher rates.
At the Finance Bureau we can help you find the most suitable product for your needs, and have access to a wide variety of financial instruments so call us for a chat and we will be only too pleased to help.
To contact Tancrede for all your mortgaging needs call 666 709 743 or email tdp@thefinancebureau.com
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