Simon Hunter
RESIDENTS of Spain could see their mortgage payments increase soon thanks to the ongoing rise of the 12-month Euribor. The rate is the most commonly used benchmark for the calculation of home loans in the country, and is currently at a level not seen since December 2008.
At the end of January, the 12-month Euribor was at a monthly average of 3.337%, according to Spanish news agency EFE. This will mean that mortgages that are due for recalculation based on this rate could cost an extra €3,400 in yearly repayments.
The rise in January from December was 32 basis points, up from 3.018% that month.
Compared to the same month in 2022, the rise is a whopping 3.8 points, given that a year ago the Euribor was actually in negative territory, at -0.477%.
Figures crunched by EFE show that an average 25-year mortgage of €150,000, and with an interest rate of the Euribor plus 1%, would cost borrowers an extra €286 a month were it to be recalculated based on the January figure. That’s around €3,430 a year.
The reason that the rate is on the rise – the sharpest since it was created – is thanks to the change in the European Central Bank’s monetary policy. Last year saw the central lender raise rates on four occasions in a bid to combat the high inflation in the eurozone.
One expert told EFE that he expected rates to reach 3.5% or 4% at the end of the first quarter of 2023, or at the beginning of the second.
Read more:
- What you need to know about getting a mortgage on your property on Spain’s Costa del Sol
- Leap of Faith: Buying a home in Spain
- Spanish mortgage victory leaves British couple with €15,000 in their pockets thanks to bank compensation payout
