Euribor rose again in September to 4.145%, a high not seen since 2008, after falling slightly to 4.07% in August. Earlier, the benchmark index for calculating mortgage payments accumulated a 20-month upward streak, from -0.5% at the end of 2021 to 4.15% at the end of 2021.
Euribor will make variable-rate mortgages under review in October more than €160 more expensive every month, around €2,000 a year, according to the average assumption collected by INE on a €150,000 loan over 25 years, differential. 1 point on this mark.
This is the second strike (or second round) of the cycle of official interest rate hikes that the European Central Bank (ECB) launched in July 2022 to fight inflation. In September last year, Euribor remained at 2.5% and has already increased the cost of the average mortgage by more than 250 euros per month, about 3,000 euros per year. It should be noted that in September 2021 Euribor was still sleeping in the negative, at historical lows.
Of course, the cost of loans, which changes with the variable interest rate, also increases. Or new ones drawn up, variable rate, fixed or mixed, compared to what banks have been offering in recent months.
Taking into account this increase in the cost of financing, the number of mortgage loans issued in July fell by 18.8% compared to the same month last year, according to data published by the INE (National Institute of Statistics) this Wednesday. This strong year-on-year decline continues a 6-month streak of declines in which they have deepened by 15% in the past 5 months. In May, banks even sold 25% less of these loans to buy houses or property.
The establishment’s strategy, led by Christine Lagarde, involves strangling households and the wider economy, as well as companies and states, by tightening access to finance. This policy has a particular impact on the mortgage market in Spain, where households with mortgage loans with a variable interest rate updated according to Euribor reach 75% of the total.
There are other data that confirm the deterioration of the mortgage market in Spain. For example, a reduction of the average amount of loans of these characteristics by 2.6% (up to 143,412 euros). The fall in the amount requested by families in July is the fifth in a row. If we look at the amount issued compared to the same period last year, the decrease is slightly more than 20%.
Indeed, an increase in interest rates reduces the demand for financing. But this increase in value also compensated for the banks, which, despite having fewer operations, were able to increase their profits excessively in recent quarters. “The ECB should not tighten monetary policy further,” warns Frédéric Ducros, chief macroeconomic researcher at Swiss unit Pictet Wealth Management.
By this time, ECB President Christine Lagarde had already admitted that “our types [los oficiales, que se trasladan al euríbor] levels have been reached [del 0% de julio de 2022 al 4,5% actual] which, sustained long enough, will make a significant contribution to the timely return of inflation to our target. [el 2%]”.
To stop the stranglehold these rising mortgages are putting on families, the government signed a Code of good practice with banks, voluntary, before 2023. This code recommended, among other things, that the bank and the customer agree to convert variable loans to fixed loans free of charge and to extend terms by freezing installments. These measures included special measures, freezes or rebates for the most vulnerable low-income families.
Source: El Diario