Twelve-month Euribor will record a fresh increase in the month of May, after leaving negative ground for the first time in more than six years last month, leading to an increase in the price of convertible mortgages in the context of this index. Will have time to review it soon.
Eurobor has been anchored in negative territory since 2016 due to the European Central Bank’s (ECB) over-expansion policy to support recovery in the euro area. Its growth continues after the change of speech of the European Organization.what Will increase interest rates soon To deal with rising inflation.
ECB President Christine Lagarde has indicated this week that the entity’s governing council meeting, scheduled for next July, would be the right time to raise interest rates for the first time in the euro area in more than one of each. ,
Lagarde He has said 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 propelled Euribor to a strong growth in the series since the beginning of the year, with a monthly rate of -0.52% on December 2021 closing to mark a positive value of 0.013% last April Happening.
In the absence of data for the next two days, the provisional average for the 12-month Euribor corresponding to May is currently 0.285%, representing an increase of 27 basis points over the month and 76 basis points as compared to – by Europa Press According to the data compiled, 0.481 per cent were registered a year ago.
twelve month old is euribor The main indicators to which convertible mortgages in Spain are referred, Consequently, its growth is accompanied by an increase in the installments paid by the pledgee.
If the index closes at 0.285% on May, then a Pledge of 150,000 euros over 20 years Euribor with a spread of +1% in which the modification will be a touch experience an increase of 50 euros per month of your monthly fee or, which is the same 600 euro per year,
Obviously, this growth in variable rate mortgages will continue. analysis department bankinter Euribor is projected to close at 0.4% on December 2022 and 0.8% on December 2023, while analysts expect caxabank They suggest 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 done so at a fixed rate., which should reduce the effect of Euribor fluctuations. Actually, the figures released by the National Institute of Statistics on Friday (offline) shows that 72.7% of mortgages on homes formed in March were signed at a fixed rate and only 27.3% at a variable rate, so that chained in three consecutive months in which fixed-rate mortgages exceeded 70%.
Fixed or variable rate mortgage?
In this scenario, financial institutions are re-adjusting their portfolio of mortgage products, which in recent years focused on offering the best fixed-rate mortgage offer. Banks are betting on narrowing the difference to convertible mortgages and making fixed rates more expensive, which may lead some customers to consider converting their fixed mortgages to a variable one.
analysts of helpmycash they assure that convert a fixed mortgage to a variableIn this time of economic uncertainty, «It is a mistake», and it is only suitable for customers who ask for a mortgage in a very short time or who know they can pay it off sooner.
« A convertible mortgage makes sense only and exclusively for a type of person with sufficient purchasing power to assume a higher fee that allows them to pay off the loan as quickly as possible. Only in this way will you be able to mitigate the impact of future increases in Euribor on your monthly payments, as you will have already paid a good portion of your outstanding money,” he explains.
HelpMyCash experts encourage users who still have enough time to pay off their loans in full, to convert to variable mortgages at a fixed rate, despite the fact that with new fixed installments perhaps They will pay more than what they are doing with their variable rateAs a result of the fact that banks are increasing the interest of the former to encourage the contracting of mortgages at a variable rate, with which they will earn more than before the increase in Euribor.
Although the current scenario is no longer that of the cheapest fixed mortgage in history, with rates of around 1%, HelpMyCash assures that The customer will have peace of mind and freedom with their Before the volatility of the indicators, the statement on the edge Central banks and other conditions that affect the market. Furthermore, he points out that there are still people who are offering fixed mortgages at 2% or less, which is “still a good business.”
in his Best fixed rate mortgage rankings May, HelpMyCash highlights the fixed mortgages of Evo Banco (1.94% APR), Targobank (1.67% APR), Ibercaza (2.21% APR), OpenBank (2.37% APR) and Santander (2.36% APR). These rates only apply to customers who meet certain requirements to receive the bonus.
Euribor will take a new leap in May and continue to make mortgages more expensive