Borrowers in Spain face rising mortgage payments as Euribor soars

RESIDENTS of Spain could see their mortgage payments increase soon thanks to the continued rise in the 12-month Euribor. The rate is the most widely used reference for calculating housing loans in the country, and is currently at a level not seen since December 2008.

At the end of January, the 12-month Euribor stood at a monthly average of 3.337%, according to the Spanish news agency EFE. This will mean that mortgages that need to be recalculated based on this rate could cost an additional €3,400 in annual payments.

The increase in January from December was 32 basis points, compared to 3.018% for that month.

Compared to the same month of 2022, the rise is 3.8 points, given that a year ago the Euribor was in negative territory, at -0.477%.

Figures processed by EFE show that an average 25-year mortgage of 150,000 euros, and with an interest rate of Euribor plus 1%, would cost borrowers an extra 286 euros per month if it were recalculated based on the January figure. That’s around €3,430 a year.

The reason why the rate is rising, the strongest since it was created, is thanks to the change in the monetary policy of the European Central Bank. Last year, the central lender raised rates four times in an attempt to combat high inflation in the eurozone.

An expert told Efe that he expected rates to reach 3.5% or 4% by the end of the first quarter of 2023, or the beginning of the second.

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