March begins with bad news for mortgage holders and all electricity company customers. Against all odds, the Euribor has surprised and this month has registered its first rise since last October 2023 it registered its highest figure in 15 years, with 4.160%. From then on, the reference index of the most used variable mortgages in Europe began a path of decline that has now stopped, three months later, ending (with only one daily data missing) at 3.667%, 0.057 points per above the average figure recorded at the end of January of this year (3.609%).
Mortgages who expected to lower their mortgage decrease – yes, those who review semi-annually will do so – and after a year of enduring monthly increases of up to 600 euros in some cases, they now have another year ahead of them to face the new expense and even a few euros further. It is also not good news to try to save on electricity consumption. After a month of February with continuous drops in the daily price of electricity, the average for the month remains below 45 euros megawatt hour (MWh), which raises VAT to 21% for at least a month since On March 1.
What will happen to the Euribor in the coming months?
Those who review their mortgage annually will see their payment increase by 11 euros per month for an average mortgage: that is, they will pay 127 euros more per year (+1.3%). Those who review their mortgage semiannually will have good news: their payment will drop by 28 euros per month (165 euros per semester). “The data show that the euphoria with which 2023 ended and 2024 began – with the expectation of a possible rate cut in March – is beginning to fade and that the markets are beginning to trust the successive warnings from the ECB. In this context, from Kelisto.es Estefanía González, spokesperson for Kelisto, estimates a Euribor of around 3.5% during the first half of the year, which would progressively decrease until closing 2024 at around 3%.
From iAhorro, Simone Colombelli, director of Mortgages of the comparator, adds that “despite the fact that the Euribor has risen slightly, if we look at its long-term evolution, we are still in a moment of stability within the decline that this indicator is expected to register.” is that, if we look at the evolution line of the average monthly data marked by the reference index in the last year we see that it is quite flat, with little pronounced rises and falls.
In Rastreator they highlight that in February the fixed-rate mortgage continues to be the modality most chosen by Spaniards. Sergio Carbajal, head of mortgages at the comparator, highlights that banking entities have focused on improving the rates of fixed mortgages, so “everything indicates that, for now, in 2024 the trend in terms of mortgage rates will follow this line giving an increasingly relevant role to the mixed, with the hope that the Euribor will relax in the future.”
Why does the price of electricity increase?
The price of electricity closes February with an average of 40 euros per MWh, its lowest price in three years, which will mean that in March electricity will once again be taxed with a VAT of 21%, compared to the real 10%. The price of electricity in the wholesale market during this February is being particularly low, thanks to intense sun and especially wind weather, with many hours in which the cost was zero and with average daily prices that during the last week . They have not exceeded ten euros compared to 132.7 a year ago, or 74 last January.
This is the cheapest month since February 2021, when the average price in the wholesale market was 28.5 euros. A month later, in March, the average price was 44.45 euros and from then on electricity began to rise in price to the all-time high in March 2022, coinciding with the start of the invasion of Ukraine.
This sharp drop means that the average price of electricity ends February below 45 euros per MWh, the limit established to recover the 21% VAT. Two months ago, the Government extended the tax reduction on electricity bills that was promoted as a result of the price increase generated after the start of the Russian invasion of Ukraine, which has just passed two years ago. The rule established the VAT on electricity would go from the 5% at which it was then to 10% and that it would remain there throughout the year 2024. However, the salvation was added that when the arithmetic average price of the corresponding daily market e to the last calendar month prior to the last day of the billing period was less than 45 euros per MWh.
