This is the “high” your mortgage will see after the ECB’s decision

Este es el 'subidón' que experimentará tu hipoteca tras la decisión del BCE

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The foreseeable rise in Euribor after the half-point rate hike will have repercussions for those families who have a mortgage, particularly a variable rate one. In this sense, there will be an increase of about 1,400 euros per year per family on average, which means an increase in the monthly mortgage payment of between 115 and 120 euros, according to estimates by Ferran Font, director of studies of the real estate portal. com.

Early last June, when the ECB announced it would make a first hike in July and a second in September, Euribor recorded its highest monthly gain, ending May at 0.287% and June at 0.852%.

So far this month, the mortgage index has averaged 0.959% and has traded at its daily rate of over 1% since July 15th. “We’re talking about an increase of more than 1.5 points in just 12 months, which will directly impact those families who have a mortgage, especially an adjustable rate,” Font warned.

While it’s not known how Euribor may end the year, Font points out that “there are estimates that put it at 1.5%, while others assure that it could reach 2023.” Absolutely must we remember that Euribor around 2% would be normal. The unusual thing was the negative interest rates, in which we have positioned ourselves at the European level in recent years,” he emphasized.

During the first half of 2022, real estate transactions have marked unprecedented numbers not seen in more than a decade. Specifically, a total of 620,000 transactions were made in the last calendar year, a number that has not been reached since the real estate bubble, explains Font, who also points out that “many families anticipated the rise in interest rates and wanted to anticipate the purchase of real estate.

WARNING FROM CONSUMER ASSOCIATIONS

Associations for the protection of consumers and financial users, Adicae and Asufinhave in two separate statements assessed the European Central Bank’s (ECB) rate hike of 50 basis points and warned of the consequences this decision could have for bank customers with mortgages.

to its end points out that the ECB’s assertiveness will accelerate the rise in Euribor, which currently stands at just under 1% on a monthly average, and that it could end the year at 1.5%, according to the association’s forecasts.

these climbs “will be specially patented” from August, when the mortgages are renewed in late July. In this sense, Asufin recommends “renegotiating” with the company or even with other banks for those customers who have “very high financial bubble” spreads of 2% or up to 3%.

“These users’ mortgages have already amortized a good portion of the capital subscribed in 2010-2014 and they are currently finding better options with a fixed or variable interest rate below 1%,” explains Asufin.

That price increase of the mortgages now being reviewed are, according to the association the 800 euroswhile if Euribor eventually closes at 1.5%, that amount could rise to 1,127 euros.

Asufin expects the majority indicator on mortgages to rise to 1.9% by 2023, which is around 1,372 euros more in the fee of mortgages, assuming an average mortgage of 100,000 euros, at 25 years and a difference of 1%.

In this scenario, he advocates paying “close attention” to the combined sale of non-rental products with the aim of adjusting the price downwards.

With these products (insurance, pension plans, etc.), the final price of the mortgage taken out in APR is “typically higher than if you forgo the discount and we look in the market for better options,” he concludes.

ADICAE TARGETS THE “INTERESTS OF THE BANKING AND FINANCIAL LOBBY”.

For his part, Adicae has “linked the interests of the banking and financial lobby” to the fact that ECB interest rates have risen bigger than expectedi.e. 50 basis points instead of the 25 points announced by the institution a month ago.

“In the opinion of the association, the increase in the central rate of the ECB by 0.50 is not unrelated to the pressure and the interests of the ECB a bank looking to expand its margins and continue to cover their deposits,” said the association, pointing to the rise in Euribor, while “the reimbursement of savings deposits has stagnated, to the clear detriment of consumers”.

Adicae believes that consumers will need “additional measures” to the ECB’s monetary policy in the face of current inflation, “in addition to the fact that Spain has continued to increase commissions and basic banking services and massive abuses have been repeated.” in the field of mortgages and credit”.

The club’s president, Manuel Pardos, has warned that it “possibly” could become “a commercial campaigns Banks urging consumers to make “urgent” decisions amid speculative message that rates will keep rising.”

In this regard, Pardos added that the current situation of “serious problems” in family income “opens the door to campaigns for ‘easy credit’, personal and for consumption, which will also be more expensive”.

For this reason, Adicae urged consumers “not to be carried away by speculative messages that encourage irrational mortgage borrowing” and to assess the possible “with caution and care.” Offers to switch from adjustable-rate mortgages to fixed-rate mortgages.

Finally, the association supported the ECB’s announcement that it would be vigilant about the financing conditions of the credit institutions, so that “monetary policy is not disturbed, especially in Spain after the experience of the bubble”, especially in the case of mortgages. to support the central bank for the countries of southern Europe in view of “potential imbalances” in their risk premiums.

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