The shock wave of the rise in interest rates hits the waterline of mortgages. The Euribor, which had remained negative since January 2016, marked by the credit policy of the European Central Bank (ECB), changed its trend last year and in April 2022 reached the first positive numbers (0.013%) with a spread of 0.479 points. Already in February 2023, the ECB has again raised interest rates another 50 basis points, leaving the ‘price of money’ at 3%, the highest since 2008.
This situation fully affects all mortgage customers who agreed to a variable interest rate month by month and also for those who review their mortgage in the coming months as usual update periods.
With the average of 3.333% registered so far in January, a person who has contracted a 30-year variable mortgage of 150,000 euros and with a differential of 0.99% plus Euribor will suffer an increase in their mortgage payment of around 294 euros, reports Europa Press. In absolute terms, you will go from paying about 450 euros to about 744 per month, which is equivalent to an additional annual outlay of more than 3,500 euros.
With the same conditions, a mortgage of 300,000 euros of capital pending amortization and 30 years pending payment would have to assume a monthly increase of 588 euros, which means more than 7,000 additional euros per year.
The average of the Euribor in December was 3.018%, therefore, in the absence of knowing the data for the first week of February, the increase in the reference rate in one month was 31.5 basis points. A year ago, it stood at -0.477%, so that in the last 12 months it has risen by 3.8 percentage points.
The cause of the rise in the Euribor is marked in the European Union for inflation. The constant increase in the prices of goods and services, including energy, caused in part by the war in Ukraine after the invasion of Russia, leads to this new economic scenario in the euro area when it was seeing the first rays of hope with hope. of light in the face of the Covid-19 crisis.
According to the financial comparator HelpMycash, with the latest upward trend in the Euribor, most mortgages signed between 2011 and 2015 will exceed the 1.5% fixed interest currently offered by most banks. Hence, it would be advisable to change it.
In the case of mortgages prior to this period of years, the credits will still not exceed the 1% barrier as of today, but it would be advisable to analyze each case based on the agreed conditions.
Those holders of a variable interest mortgage who decide to change to a fixed interest loan must opt for one of the following three formulas:
For the Idealista.com portal, the mortgage novation option, that is, changing the variable mortgage to a fixed one, is the simplest operation.
In the event that your entity does not show up for the work of agreeing new conditions, the client may subrogate the mortgage with another bank and reformulate the conditions of the mortgage loan. While the cancellation of the mortgage and the creation of a new one would be the option to apply if what you need is to increase the capital of the credit to carry out a reform in the house or you plan to make another investment in parallel.
In relation to the cost of the operations, usually a novation or subrogation of the mortgage represents 0.15% of the operation for three years. While a new credit would mean a cost close to 1% of the mortgage.
According to the criteria of The Trust Project