The confidential. Has the end of the negative Euribor come?Is the party over in the mortgage market? Is the era of fixed mortgages come to an end? The rebound experienced by the Euribor during the month of February brings with it numerous questions. Some financial entities such as Bankinter have begun to make a move and have increased your fixed mortgage, lowering, on the contrary, its variable product. Will other entities follow in their footsteps?
For now, the Euribor, fires February at -0.334% after closing January at -0.479%, a significant rebound at a monthly level, but also annually, since a year ago, the indicator closed at -0.501%, which will bring with it increases in the mortgage payment. You have to go back to April 2020, in the midst of a pandemic, to find a comeback of this caliber.
«After six years in negative, the Euribor has starred in a month of February in which instability has been the predominant trend. After remaining stable for the first 10 days of the month, on February 11 and 14 the indicator shot up to -0.283% after the president of Banco Central Europea (ECB), Christine Lagardewill leave the open door to raise rates of interest this year”, explains the director of iAhorro Mortgages, Simone Colombelli.
The small comeback in the Euribor will have a direct impact on the pockets of mortgage holders. According to iSavings calculations, the mortgage payment will rise between 150 and 300 euros per year.
Thus, for example, in the case of a mortgage of €150,000 over 30 years with Euribor +0.99% this month they will have to pay a fee of 541.77 euros compared to 529.96 they paid until now, which is 11.81 euros per month or 141.72 euros per year. In the case of a loan €300,000 over 30 years with an interest rate of Euribor +0.99%, after the rise in the indicator they will pay 1,083.93 euros of fee compared to 1,059.93 that they paid until now, a difference of 24 euros per month or what is the same, 288 euros for the whole year».
“We have lived a month with a lot of fluctuation of the Euribor, when all forecasts pointed to stability. The change of speech of the president of the ECB caused by the high inflation that Europe is experiencing has pushed the euribor to zero. If this trend continues and the change in economic strategy is confirmed, it would be a setback for families, since their mortgage payments would increase and would lose purchasing powerColombelli adds.
In addition, the month of February ends, in the words of Colombelli, “with another economic earthquake at the hands of Russia’s attack on Ukraine.” And he wonders How can the war affect the Euribor? “After two years of uncertainty due to the pandemic, it seemed that the economy was beginning to recover. What’s more, we have ended 2021 with the best housing sales data since 2013. However, now we are facing another moment of uncertainty and we will have to see how the ECB, the markets, etc. react”, explains the director of Mortgages of iSavings.
Will mortgages become more expensive in the short term?
For now, the first movements by financial institutions have begun to take place in the mortgage market. “The Euribor has reached one of the highest values since summer 2020 and it is beginning to be seen, albeit timidly, how entities, especially those of higher dimension, are starting to make some changes, trading with higher fixed rates than a month ago. It is true that at the moment there have been no major movements, but we will have to be very aware of the next steps of the banks, ”says Sergio Carbajal, head of mortgages at Rastreator.
“However,” he adds, “as long as there are no major variations, the mortgage war to attract new customers will continue and with a trend towards a increase in the mortgage offer at a fixed rate and more before the possible variations of the next months».
And it is that fixed mortgages have been the great beneficiaries of the decline in the Euribor in recent years. Both entities and users have opted for this type of loan, removing prominence from variable mortgages to the point that, in new contracts, seven out of ten signed mortgages are at a fixed ratewhen just four years ago, they were three out of ten.
However, according to Simone Colombelli, “if this change in the Euribor trend is finally maintained, the banks will also move tab and it is possible that the offers of their variable loans will improve and the rates of the fixed ones will worsen a little. The first to move tab has been Bankinter.
In this sense, the director of Mortgages at iAhorro encourages citizens who are currently looking at a mortgage to have the FEIN (European Standard Information Sheet) of the bank with which they want to sign their loan so that they do not apply upward modifications to their conditions. “When the citizen already has the FEIN of his entity, with all the details of the offer, no modifications can be applied, so it is very interesting to have it tied as soon as possible,” he points out.
For his part, Ferran Font, director of studies at piso.com, believes like Carbajal that the commitment to the fixed rate will continue. «Mortgaged futures will continue betting on the fixed rate to have greater predictability of what they are going to pay in the future, without being exposed to future rises in interest rates, although the financial entities that want to protect their income statementthey will surely be more interested in changing the conditions of their mortgages, trying to favor variable-rate products”, says Font, who does not foresee sharp rises in interest rates nor a significant rise in mortgages.
When could the Euribor approach zero?
Regarding the short-term evolution of the Euribor and its return to positive territory, the experts agree that we will still have to wait. From the CaixaBank ‘research’ department do not expect a sharp upward turn in interest rates. «We anticipate that by the end of this year the ECB will undertake its first increase of 0.25, less aggressive than the FED. The rise, moreover, will be gradual, with two other increases in 2023. It is difficult to think of a more aggressive rate rise process, ”said Judith Montorio, senior economist at CaixaBank Research, on Tuesday at EFIMAD.
Colombelli, for his part, emphasizes that the next month will be key for the evolution of euribor, since the ECB’s emergency debt purchase program comes to an end in March. “In the following months, the pace of purchases will be lower, so that little by little the stimuli will be eliminated, in line with what the Federal Reserve has done in the United States. So this year I think the forecasts will have to be month by month«, emphasizes Colombelli, who, in addition, points out that possibly, this is the last train for all the people who are thinking of subrogating their mortgage and get better conditions.
“The trend is for rates to rise, so it will be very difficult for a moment like this to change and improve mortgage conditions,” concludes this expert.
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