Interest rates are rising in Spain and Europe but, despite inflation, the Euribor remains below 1%

THE Bank of Spain confirmed that the 12-month Euribor closed July at a monthly average of 0.992%, compared to 0.852% in June.

This continues the upward trend that began in early 2022, although the rate of increase has started to slow. But as inflation remains high, it is likely that Euribor – the base lending rate against which loans are calculated – will continue to rise.

The rise in Euribor is 1.483 points compared to a year ago, when it averaged -0.491%.

Overall in July, it rose by 0.14 points, although headlines were made when the European Central Bank raised it to 1.2% on July 22 before falling back below 1% at the end of months.

As mortgage rates are set according to Euribor, the result of these hikes will be more expensive mortgages – although they are still relatively cheap compared to the double-digit interest rates seen in the 1990s.

View of the headquarters of the Bank of Spain (Madrid) from the Plaza de Cibeles (square). Wikipedia picture

However, those with a variable rate mortgage will have to dip more into their pockets when calculating their annual or semi-annual review.

For example, a 30-year variable mortgage of €150,000 will cost €90.28 more per month, assuming an 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 so pessimistic.

Of course, the numbers above apply to those on adjustable 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 introduction of the new EU mortgage directive, they are generally not available. not available for people not benefiting from the euro.

It may be a good idea to sign up now while rates remain low. Some banks stopped offering fixed rates for a short while, but are now reintroducing them at higher rates.

At the Finance Office, we can help you find the best product for your needs and gain access to a wide variety of financial instruments, so call us to chat and we’ll be happy to help.

To contact Tancrede for all your mortgage needs, call 666 709 743 or email [email protected]

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