31 Jan, 2023 @ 19:30
1 min read

Borrowers in Spain face rising mortgage repayments as Euribor shoots up 

MortgageLending

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.

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Simon Hunter

Simon Hunter has been living in Madrid since the year 2000 and has worked as a journalist and translator practically since he arrived. For 16 years he was at the English Edition of Spanish daily EL PAÍS, editing the site from 2014 to 2022, and is currently one of the Spain reporters at The Times. He is also a voice actor, and can be heard telling passengers to "mind the gap" on Spain's AVLO high-speed trains.

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