Rising rates: the Euribor reaches its highest level since 2008

The continued rise in the 12-month Euribor (base rate) could cost the average mortgage holder €286 per month.

The Euribor is the most widely used reference for calculating home 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%, which means that an average 25-year mortgage of €150,000, and with an interest rate of Euribor plus 1.5%, would cost borrowers an additional €286 per month if recalculated based on the January figure. That’s around €3,430 a year.

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%.

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 the EFE news agency 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.

The rates that borrowers pay are calculated by adding the bank’s margin, effectively what they earn, to the base rate, so that we can improve the bottom line for our clients by negotiating reduced margins with lenders and that’s what we’re focusing on in the office of finances at this time. time.

With increases like these, it’s more important than ever to shop around for the best deals available. Give us a call at the Finance Office and we can help you.