The twelve-month Euribor extends the rise of recent days and reached 4.16% on Friday, its highest level since July 21, after the last meeting of the European Central Bank (ECB) in which they decreed an increase in interest rates of 25 basis points, to 4.5%. With this, the price of money climbs to its highest levels since 2001. In a month-on-month rate, the rise is almost 2%.
In this way, the barometer of the cost of variable rate mortgages, corporate loans and consumer loans registers a weekly average of 4.12% and breaks the downward trend with which the month started, in line with August, when the monthly average fell for the first time in two years. This rate remained practically flat for some days at around 4% due to the uncertainty that existed about whether the rate pause in the eurozone would finally materialize, a trajectory that changed this week, rising to 4.1%.
The investment bank considers the cycle of rate increases in the eurozone closed despite the fact that the macroeconomic picture it manages points to higher inflation this year, up to 5.6%, to moderate to 3.2% in 2024. It would not be until 2025 when it would fall to 2.1%, close to the target. The forecast contrasts with GDP projections, which are worsening. The rate cycle is already having an effect on demand, leading them to revise activity expectations downwards and they expect the euro area economy to grow by 0.7% in 2023, 1.0% in 2024 and 1.5% in 2025.
The evolution of the Euribor is linked to the expectations of official interest rates, which are defined based on price stability. The wave of inflation that began in the summer of 2021 forced central banks to take monetary tightening measures, which the European Central Bank (ECB) joined somewhat later. This delay in execution explains why Euribor rates are below the levels set by its counterparts such as the Federal Reserve (5.25-5.5%) or the Bank of England (5.25%), which are They will meet next week.
The preparation of this rate only includes 19 European banks this year, including four Spanish banks: Santander, BBVA, Caixabank and Cecabank. The European Monetary Markets Institute (EMMI) collects daily data on actual transactions at various maturities in the interbank market and publishes an aggregate figure that is considered as a reference.
Your monthly average is normally used as an official reference to calculate the base cost of variable rate mortgage loans. Financial institutions add a differential to this index to determine their profits. In Spain, the twelve-month Euribor continues to be the most used index and is reviewed annually, which means that mortgage owners face price adjustments every year.
