The Euribor slows its advance and closes July below 1%

The 12-month Euribor closed July with a monthly average of 0.

NewsEditor
NewsEditor
29 July 2022 Friday 09:55
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The Euribor slows its advance and closes July below 1%

The 12-month Euribor closed July with a monthly average of 0.992%. The main index for calculating variable-rate mortgage installments continues the upward trend that began at the beginning of the year, but its progress is slowing down, since after marking the highest monthly rise in its history in June, this month it has only risen 0.14 points, standing below 1%.

The index registered its highest daily value on July 22, coinciding with the announcement by the European Central Bank (ECB) to raise interest rates by 50 basis points, above the increase of 25 basis points advanced in recent weeks. That day, the indicator stood at 1.2%, but has since deflated to pre-announcement levels.

Despite this, as a result of the notable increase in the index compared to a year ago, a consumer who has contracted a 30-year variable mortgage of 150,000 euros and with a differential of 0.99% plus Euribor, will suffer an increase in their installment mortgage of 100.77 euros, so it would go from paying 448.72 euros per month to paying 549.49 euros from the review, which is equivalent to an increase of 1,209.24 euros per year.

Looking ahead to the coming months, experts point out that the Euribor will continue to climb, although most projections suggest that it will close the year below 2%. This is the case of the Bankinter Analysis Department, which predicts that the index will be 1.90% in December and 2.20% in 2023. Asufin is more optimistic, pointing out that the indicator will rise to 1, 50% at the end of the year and that in 2023 it will be 1.90%.

For his part, the director of mortgages at iAhorro, Simone Colombelli, has acknowledged that the ECB's rate hike will affect citizens who want to apply for a new mortgage, especially if they want to take out a fixed-rate one. The reason is that the increase in the official rate will increase the cost of financing for banking entities, which in turn will end up passing the increase on, most likely, to users. "The entities are going to raise the interest rates of their offers to the same extent and surely this effect will be noticed immediately," warns Colombelli.

As for variable mortgages, the director of mortgages at iAhorro foresees that the current offer will be maintained or even improved. However, consumers who now have to review the payment of a variable mortgage will experience a significant increase, whether the review is for six months or twelve months.

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