Tancrede de Pola (OP Columnist)
THE ongoing rise of the 12-month Euribor (base rate) could cost the average mortgage holder €286 a month.
The Euribor is the most commonly used benchmark for the calculation of home loans in the country, and is currently at a level not seen since December 2008.
At the end of January, the 12-month Euribor was at a monthly average of 3.337%, which will mean that an average 25-year mortgage of €150,000, and with an interest rate of the Euribor plus 1.5%, would cost borrowers an extra €286 a month were it to be recalculated based on the January figure. That’s around €3,430 a year.
The rise in January from December was 32 basis points, up from 3.018% that month.
Compared to the same month in 2022, the rise is 3.8 points, given that a year ago the Euribor was actually in negative territory, at -0.477%.
The reason that the rate is on the rise – the sharpest since it was created – is thanks to the change in the European Central Bank’s monetary policy.
Last year saw the central lender raise rates on four occasions in a bid to combat high inflation in the eurozone.
One expert told news agency EFE that he expected rates to reach 3.5% or 4% at the end of the first quarter of 2023, or at the beginning of the second.
Rates payable by borrowers are calculated by adding the bank’s margin, effectively what they earn, to the base rate so, we can improve our client’s outcome by negotiating reduced margins with the lenders and that is what we at the finance bureau are focussing on at this time.
With rises such as these it is more important than ever to search for the best deals available. Give us a call at the Finance Bureau and we can help you.
