The Euribor today starts May with good news for mortgage holders. It rises compared to the last data from April, but remains at 3,728% and is a good record for mortgage holders to continue reducing the price of their mortgage. We still have to know the behavior during the rest of the months, but there is a figure that we cannot get out of our heads and it is 3,862%. This is how it closed on average in 2023 and against that figure, mortgage holders who have to renew their home credit will begin to pay more or less installment. April already broke the upward trend and after almost two years of only increases, even those mortgaged with variable credit and annual review have been able to restore a few euros to that expense (for now 4 euros). According to experts, there is a change in trend that will be even more noticeable when the European Central Bank shows its monetary policy and begins to lower interest rates. Expected date: June.
“Those with variable interest rate mortgages are beginning to see the light at the end of the tunnel.” With these words, the director of Mortgages of the mortgage comparator and advisor iAhorro, Simone Colombelli, values the lowering of installments. And the reference index has closed April 2024 at 3.703%, a figure only 0.015 points lower than that registered at the end of March (3.718%), but enough for it to also be lower than that recorded during the month of April 2023, when it stood at 3,757%.
Let us remember that December 2021 the Euribor was still at negative values and that, from then on, it began to rise very abruptly, causing variable rate mortgage holders to suffer increases in their monthly payments of up to 300 euros per month, depending on the on of the loan account. “Now we are seeing stability in the Euribor and a drop in rates, which, although not very high, is widespread in banking,” explains the iAhorro spokesperson.
How much does your mortgage go down in the annual review?
As the mortgage director of iAhorro said, although the current situation brings with it a certain optimism for the future, the reduction in installments is very slight and mortgage holders will not notice a significant change with this month’s reduction. For example, if we take the case of a person who took out a variable mortgage of 150,000 euros for 30 years in April 2021, with a differential of 0.99% plus Euribor and who now has to do his third annual review, we see that he barely You will notice a reduction of about 4 euros, while your fee became more expensive during previous reviews by more than 300 euros in total.
So much so that, with the Euribor at -0.487% in April 2021, it began paying a monthly fee of 448.98 euros, but in the first review in April 2022 it already rose to 481.55 euros due to the rise in the Euribor. (0.013%, first positive data for this indicator since February 2016). However, with the following year’s review came the biggest setback: the fee rose by almost 300 euros, to 759.36 euros per month, because the reference index shot up to register an average value of 3.757%. And now, three years later, you will see your first reduction of 4.38 euros in your fee, which will leave it at 754.98 euros per month (52 euros less per year).
If the amount of the mortgage increases to 300,000 euros, this year’s reduction would be 8.76 euros per month or 105 euros annually because paying an installment in 2023 of 1,518.73 euros will be reduced from this review to 1,509, 97 euros every month. Of course, in this case the accumulated increase in the monthly payment that this person would have seen since 2021 amounts to 612.01 euros, so the current decrease does not compensate for the previous increases.
It is true that reviews, in addition to annual ones, can be semiannual or quarterly, although the latter are not common. Therefore, if we take the same mortgage as the previous example, but with a semi-annual review instead of an annual one, in the case of the 150,000 euro mortgage we see that we also started paying 448.98 euros for it, which in the next review barely increased. at 449.64 euros, but from there the increases skyrocketed to the 786.80 euros paid after the review in October 2023, the month in which the Euribor marked its highest level in 15 years, placing it at the 4.16 0%.
Of course, now, when you do the review this month, since the Euribor is lower than in October, the reduction in price will be greater than in the case of the annual review: the fee will drop to 747.62 euros and, therefore, The reduction will be 39.18 euros per month or, which is the same, 235.06 euros for the next six months. However, if we add the increases in price and subtract this reduction we see that the figure is quite negative: the mortgage has become more expensive by almost 300 euros in total.
Likewise, if the mortgage were 300,000 euros, the reduction in the installment this month would be doubled: pay in October 2023 up to 1,573.59 euros per month to pay an installment of 1,495.24 euros (savings of 470 euros per year). However, just as the drop is doubled now, the accumulated increase in price if we look at previous reviews is much higher, with an increase of about 600 euros in total.
How are you?
Euribor is the acronym for the European Interbank Offered Rate, by its definition in English European Interbank Offered Rate. That is, it refers to the amount that one European bank charges another for lending money.
And calculate the Euribor?
The European Money Markets Institute (EMMI) is responsible for calculating the Euribor. To do this, it uses a ‘panel of banks’, made up of 19 different banks, which report every day at 10:45 a.m. on the interest rate at which they are willing to lend money to other banks in the Euro zone. With this data and eliminating the highest 15% and the lowest 15%, the average is calculated. The result, which is rounded to three decimal places, is published at 11:00 a.m. In Spain, the Bank of Spain and the BOE collect the information and update and publish it daily.
