Reducing inflation is the main reason behind the ECB’s base interest rates.
In September, they were increased by 75 percentage points, the same decision was taken in October and on December 15. another ECB decision is pending.
For now, the consensus among experts is that the ECB will continue to raise interest rates, but it is unclear whether they will be raised by 75 percentage points for the third time.
All of this ultimately affects the EURIBOR interbank lending rate, which directly determines the premiums paid to residential banks.
Rising premiums empty wallets
Karolis, who lives in Vilnius and bought a house with a loan, said his interest was last recalculated in September.
Born at 6 months EURIBOR has so far not waived the loan maturities for the apartment purchased for the husband. He calculated that previously the monthly payment to the bank amounted to 220.5 EUR, but after recalculating the interest it changed to 241.56 EUR.
“At the moment it is not a very large amount, but 10% the price is generally not low.
If we paid installments of 700 euros each, they would have increased to 770 euros,” he said and assured that the next recalculation of interest awaits him in early February.
On the contrary, Laura, who lives in Vilnius, said she didn’t know what to expect next.
“My loan repayment before the increase was 256 EUR, after the increase – 301 EUR,” she explained.
The woman said such a bonus increase seemed like a sign to her.
“I really expected less. Everyone said they were going to raise 10, maximum 20 euros. It surprised me and at the same time I don’t know what to expect next. I think it’s not It’s not the end yet,” she thought.
Tom spoke a little more calmly. He testified that from the initial loan payment, his payment, after recalculating the interest some time ago, then still applied 1.29%. The EURIBOR has risen by around 20 EUR, but these interest rates will only be valid for the man until the beginning of March.
He explained that rising interest rates did not scare him.
“I’m not afraid, because when I took out the loan, I was warned about the increase in the maximum monthly payment.
At the time, it was explained that, say, from 200 EUR per month, it could even rise to 500 in the event of a major crisis or war.
Up front, man, you decide if you’re willing to pay that much in the worst case. If I hadn’t made up my mind, I wouldn’t have taken out the loan,” he explained calmly.
Virginija from Klaipėda also spoke. After the recalculation of the interest rates, the monthly installments of the loan fell from 185 EUR to 216 EUR and were last recalculated in September.
“Am I afraid of the raise? If I’m scared, I won’t change anything. I’m just glad I paid very low interest for six years, well, now I’m going to have to pay more.
But I am of the opinion that there is no reason to complain, but to try to earn more,” she said.
There was also a stir on social media
On social networks, the inhabitants also share the amounts of the contributions, which for some have not yet moved, while others have already considerably emptied their pockets.
Jurgis said his payment to the bank increased by 30% after the recalculation of interest, but the resident did not specify the exact amount.
Ingrida testified that she had two bank loans and that the interest on each of them had already been recalculated.
“The total amount that I now have to pay to banks each month has increased. The interest on a loan was recalculated in August. Before that, the payment was 284 euros, after recalculation – 308.57 euros.
Other loan interest rates were also recalculated in early November. The payment before that was 229.45 EUR, but now from December we will pay 240.24 EUR each.
Although the overall upside is not large so far, we are looking forward to the start of February. According to our calculations, the payment of one of the loans will increase by 100 euros after recalculation of interest,” Ingrida said.
Banque SEB economist Tadas Povilauskas said the ECB, which will make a decision in December, will raise base interest rates by another 75 percentage points.
“They’re going to go up 1.5% to 2.25%,” he said, but added that we shouldn’t be too scared because this base rate hike is already “included” in the plan. current EURIBOR.
“December’s decision will not affect the EURIBOR interest rate.” Unless the increase is less.
Everything will be in the comments of the ECB, the updated macro forecasts and what will be the indications of interest rate hikes in the future”, explained T. Povilauskas.
According to him, there is a general consensus in the market that the three-month Euribor should reach around 3% by the end of next year. and keep going up.
“This reflects the fact that base interest rates will now be raised by 75 percentage points, followed by another 50 basis points at the first meeting next year in early February.”
And here the ECB will stop at 2.75%, which more or less translates to 3%. EURIBOR,” the economist said.
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Source: The Delfi