The 12-month Euribor, the indicator most used in Spain to calculate mortgage payments, maintains the upward trend of September and rises in October for the second consecutive month. The monthly average is -0.477%, significantly above the previous -0.492%, and marks the highest value so far in 2021 and since October 2020.
The increase experienced by the mortgage rate par excellence is not enough yet to make the mortgages that are due for annual review more expensive, given that just a year ago the rate was -0.466%. However, the sales are getting smaller and smaller. For an average loan of 150,000 euros for a term of 30 years with a differential of 0.99% over the Euribor, the savings in monthly installments will be around 0.83 euros per month or 9.96 euros per year. The direct of Mortgages of iAhorrro, Simone Colombelli, highlights that mortgages continue to get cheaper, but warns that “in these months, we began to notice that the decreases in installments are already much smaller because there is not much room for maneuver either”.
In fact, mortgages with semi-annual review are already on the rise. The value of the Euribor was lower six months ago (-0.484% in April), so the monthly payments of these clients will become slightly more expensive, about 40 cents per month or 2.4 euros per year.
Experts assure that the key to the evolution of the index is in the inflation of the euro zone, as well as in the response to the increase in prices of the central banks. The latest CPI data shows an escalation in October to 4.1%, its highest in 13 years.
In recent months, the 12-month Euribor interspersed moderate rises and falls. “We believe that this will be the trend in the coming months unless there is some important change at the economic level or the ECB changes its strategy,” says Colombelli. For their part, HelpMyCash analysts attribute the rise in the Euribor in October after eleven months below the -0.48% barrier to rising inflation.
Inflationary pressures are on the table. However, just yesterday, at the monetary policy meeting of the European Central Bank (ECB), its president Christine Lagarde, rejected a scenario of an interest rate hike since she rules out that the price increases are structural. “Inflation will be longer than expected, but temporary,” he said. The Euribor price reacted today with a sharper rise, to -0.455%.
“Lagarde tried to move away from the calendar of interest rate hikes expected by the market before 2023 and continues to maintain the discourse on the transience of inflation based on the future normalization of energy prices, low wage growth and rebalancing of supply and demand in global value chains, “says Carlos del Campo, a member of Diaphanum’s Investment Department. Still, the fund manager Federated Hermes warns that there is “a growing global trend towards monetary tightening.”
On his side, Colombelli believes that “if prices continue to rise, it will be necessary to see what decision the ECB makes regarding its interest rate policy. It can follow the established plan or it can give a twist to its strategy with a rise in rates to control inflation. This could cause the Euribor to begin to rise more agilely than it has done so far. ”From HelpMyCash they consider that, although the ECB is not considering raising rates at the moment,” with rising inflation , the probabilities that the ECB will raise interest rates in the future (to 0% since 2016) are higher, as it is one of the measures that can be used to contain it “.
For the remainder of the year, experts do not expect big movements in the Euribor. Forecasts suggest that the Euribor will remain below 0% for a few more years, although with an upward trend. Bankinter’s analysis department anticipates that the Euribor will remain negative in the short term. Specifically, it foresees that it will be around -0.45% in December 2021, -0.32% at the end of 2022 and -0.18% in 2023. Thus, in the near future, it seems that the Euribor has not yet it will tread positive ground.
The 12-month Euribor bottomed out in January (-0.505%, a record low). It rose slightly in February (-0.501%) and continued to increase in March (-0.487%), April (-0.484%) and May (-0.481%). In June it fell again (-0.487%), as well as in July (-0.491%) and August (-0.498%). Already in September it resumed the upward path that has been maintained in October.