Six years, two months and eight days. It is the time in which the 12-month Euribor, the indicator to which most mortgages in Spain are referenced, has remained negative. Until this Tuesday, when the index, expressed in daily rate, has marked 0.005%. It is a minimal but significant advance because it is the first time that it has entered positive territory since February 4, 2016; that is, 2,259 days ago.
The escalation in recent times has been abrupt. On December 20, the indicator touched its historical low (-0.518%, somewhat below its theoretical low of -0.5%) and there was nothing to predict that it would turn positive in less than four months. But the war in Ukraine and, as a consequence of it, the persistence of inflation have put pressure on it to rise. And that even before the European Central Bank (ECB) has made a move and officially raised interest rates, which the markets already take for granted will happen this year. Across the Atlantic, the US Federal Reserve has already raised the price of loans in that country.
So far in April, the average 12-month Euribor is -0.057%. This average is important because it is the one that marks the evolution of most mortgage loans. The Euribor, in fact, is the price at which the main banks in the euro zone are willing to lend money to each other. Its interest for the consumer lies in the fact that in Spain almost all variable mortgages, which dominated the market until recently fixed ones became more competitive, are referenced to that interest. And most are reviewed annually, with the difference between the last monthly average and that of the same period of the previous year.
The expansionary monetary policy of the ECB caused the index to go negative in 2016 and it has remained at unusually low levels for years. In addition, when the regulator was expected to raise its interest rates (which tends to be reproduced in the rest of the system, and therefore in the Euribor), the arrival of the pandemic prolonged that situation. To the point that last December the monthly average was -0.502%. Since then, however, every month has resulted in increases for customers who had to review their mortgage.
In January, the monthly average was -0.477%, so the difference with January 2021 (-0.505%) already made mortgages more expensive. And so until March, when it stood at -0.237%, compared to 0.487% in March 2021, which translates, for a variable mortgage of 150,000 euros over 25 years and referenced to the Euribor plus one point, into paying 18 euros more a month. In April, for the moment, the monthly average is still negative, but that will not prevent the loans that are updated this month from rising, since a year ago the average was -0.487%.
If the monthly average is positive, there will also be an increase in the cost of those old mortgages that had a 0% floor clause. The floor clauses, questioned by the courts in many cases and prohibited by the mortgage law since 2019, are valid in some cases and there may be old loans with that reference to 0%. This means that when the Euribor goes negative, only the agreed differential is paid without subtracting what the indicator indicates. In practice, the quotas had been frozen for six years. Now, when returning to positive, they would begin to increase.
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