New ceiling in the 12-month Euribor. The index of wholesale loans between banks and variable mortgage reference stood today, Thursday, February 23, at 3,642% in its daily price, its highest level since December 8, 2008. The provisional average for February is above of 3.5%, something that has not happened since November 2008. It has moved up in 13 of the 17 working sessions.
Taking 3.5% of the provisional monthly average as a reference, the annual Euribor differential is now 384 basis points, 3.84 percentage points, above the monthly average for February 2022. This jump will cause the highest price of the history in the installments of variable-rate mortgages, which continue to be three out of four in Spain.
For a loan of 100,000 euros for 25 years of recent constitution, linked to the 12-month Euribor plus one point (bank margin), the fee would go from 361 to 554 euros, about 2,300 euros or 53% more per year. With the same conditions and terms but with an import of 200,000 euros, the monthly bill will go from 724 to 1,108 euros, which also means a 53% increase in cost or more than 4,600 euros per year.
The rise in the Euribor from mid-February has to do with expectations of further rises in interest rates in the euro zone. The president of the European Central Bank (ECB), Christine Lagarde, warned on February 2 of the possibility of a third rate hike this year in May, to 3.75% -4%, although the warning went unnoticed by much of the market and observers of monetary policy.
However, the insistence of various members of the governing council such as Isabel Schnabel and Olli Rehn in subsequent statements has reactivated expectations among commercial banks of further tightening of financing conditions. This new climate is already being reflected in the Euribor price at 3, 6 and 12 months.
The Euribor has celebrated its first anniversary of almost uninterrupted rises this month. Twelve months ago, the ECB admitted for the first time in almost a decade that it could raise rates due to rising inflation in the euro zone. The trend was reinforced with the start of Russia’s invasion of Ukraine on February 24, 2022 and in April of last year, the index went from negative to positive after six years in the red.
