The Euribor , the index to which most mortgage loans in Spain are referenced, will add the fourth consecutive month of increases in May, closing at around -0.480% . Thus, one of the unknowns is whether the upcoming review mortgage payments will also become more expensive.
The financial comparator HelpMyCash has prepared an analysis in which they calculate how much the increase or decrease in the mortgage payments would be, as well as the trend of the Euribor for the coming years, since everything depends on “the periodicity with which the interest of these products “.
What will happen in the next weeks with the quotas?
First of all, the thing to keep in mind is that the interest on variable mortgages is reviewed every six to 12 months. Thus, in each update, the bank “takes the last value recorded by the Euribor” and uses it to calculate the new rate to apply. In such a way that “if this new interest is higher, the loan installments will be more expensive.”
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From HelpMyCash they remember that six months ago the Euribor stood at -0.481 and, therefore, ” a variable mortgage with a semi-annual review would become more expensive if it were reviewed in the coming weeks .”
For example, for a loan of 150,000 euros for a term of 25 years with a Euribor plus 1%, the installments would increase from 533.25 to 533.31 euros. This supposes “an increase of 36 cents in the whole of the following semester”.
However, the Euribor was at -0.081 in May 2020, twelve months ago, and if the revision were annual it would be reduced considerably. In the previous example, the installments would be reduced from 559.83 euros to 533.31 euros , “so the mortgaged would save 318.24 euros during the next year,” they explain.
What will be the trend of the Euribor?
The increase in this index worries those clients who have a variable mortgage, although the financial comparator assures that a drastic increase is not expected in the short term . In fact, Bankinter’s analysis department highlights that it will continue to hover around -0.5% throughout 2021. Moody’s points out that there will be no relevant increases until 2023.
” In the medium and long term, however, this index could undergo changes depending on how the economic situation in the euro zone evolves”, they indicate in HelpMyCash. In this case, if the situation improves and inflation increases, the ECB could raise rates and, consequently, the Euribor would also increase.
It is currently little possible to know what will happen. “Some experts believe that there will be an economic boom as soon as the pandemic passes, while others assure that the economy will remain stagnant for years,” they explain. In such a way that we will still have to wait a few months to see what the impact of the pandemic is and, as a consequence, that of the Euribor.