The twelve-month Euribor will register a new increase in the month of May, after having left negative ground behind last month for the first time in more than six years, which will lead to a rise in the price of variable mortgages referenced to this index to which Soon it will be time for review.
The Euribor, anchored in negative territory since 2016 by the ultra-expansive policy of the European Central Bank (ECB) to underpin the recovery in the euro zone, continues its climb after the change of discourse of the European body, which will soon raise interest rates to cope with escalating inflation.
The president of the ECB, Christine Lagarde, has indicated this week that the meeting of the Governing Council of the entity scheduled for next July will be the right time to undertake the first rise in interest rates in the euro zone in more than one of each.
Lagarde has pointed out that, based on the current outlook, the agency is likely to be in a position to leave negative interest rates behind by the end of the third quarter.
This normalization of monetary policy has led the Euribor to chain strong increases since the beginning of the year, going from closing December 2021 with a monthly rate of -0.502% to marking a positive value of 0.013% last April.
In the absence of knowing the data for the next two days, the provisional average for the 12-month Euribor corresponding to May currently stands at 0.285%, which represents a rise of 27 basis points in the month and 76 basis points in compared to -0.481% registered a year earlier, according to data compiled by Europa Press.
The twelve-month Euribor is the main indicator to which variable mortgages in Spain are referenced. Consequently, its rise is accompanied by an increase in the installments paid by the mortgaged.
If the index closes May at 0.285%, a 20-year mortgage of 150,000 euros with a spread of Euribor 1% that is reviewed will experience an increase of 50 euros per month in its monthly payment or, what is the same , of 600 euros per year.
Predictably, this increase in variable rate mortgages will continue to increase. Bankinter's Analysis Department estimates that the Euribor will close December 2022 at 0.4% and December 2023 at 0.8%, while CaixaBank analysts point out that the index could reach 1% next year.
In any case, more than half of the mortgages that have been signed in recent years have been at a fixed rate, which should reduce the impact of Euribor fluctuations. In fact, the data released on Friday by the National Institute of Statistics (INE) show that 72.7% of the mortgages on homes that were constituted in March were signed at a fixed rate and only 27.3% at a variable rate, so that three consecutive months are chained in which fixed-rate mortgages exceed 70%.
In this scenario, financial institutions are readjusting their portfolio of mortgage products, which in recent years had focused on offering the best fixed-rate mortgage offer. Thus, banks are betting on reducing the differential of variable mortgages and making fixed rates more expensive, which may lead some clients to consider changing their fixed mortgage to a variable one.
HelpMyCash analysts say that changing a fixed mortgage to a variable one, at this time of economic uncertainty, "is a mistake" and is only suitable for clients who ask for a mortgage in the very short term or who know that they can cancel it soon.
"A variable mortgage makes sense only and exclusively for a type of person with sufficient purchasing power to assume high installments that allow them to pay off the loan as soon as possible. Only in this way can they reduce the effect of future rises in the Euribor on their monthly payments, because he will have already paid a good part of the money he owes", they explain.
HelpMyCash experts do encourage those users who still have enough time to fully pay off their debt to change the variable mortgage to a fixed rate, despite the fact that with the new fixed installments they will probably pay more than what they had been doing with its variable rate, as a result of the fact that the banks are increasing the interest of the former to encourage the contracting of mortgages at a variable rate, with which they will earn more before the rise in Euribor.
Although the current scenario is no longer that of the cheapest fixed mortgages in history, with rates of around 1%, from HelpMyCash they assure that the client will gain peace of mind and independence with them in the face of the rises and falls of the indicators, the 'in extremis' statements by central banks and other situations that affect the market. In addition, they point out that there are still those who are offering fixed mortgages at 2% or below, which "is still a good deal."
In its ranking of the best fixed-rate mortgages for May, HelpMyCash highlights the fixed-rate mortgages from Evo Banco (1.94% APR), Targobank (1.67% APR), Ibercaja (2.21% APR), Openbank (2, 37% APR) and Santander (2.36% APR). These rates apply only to customers who meet certain requirements to obtain a bonus.
