The Euribor, a benchmark for variable mortgages, reached 3% in its daily rate this Friday, something that had not happened since September 2024, almost two years ago. Behind the upward trend is the environment of higher inflation and rate hikes that the market is pricing in due to energy tensions with the war in the Middle East.
The figure threatens a sharp increase among the loans that need to be reviewed. With ten trading days left, the monthly average, which is used for the review, is expected to close at 2.9%-3%, up to two tenths above July’s 2.85%.
Joaquim Clarà, adjunct professor of Economics and Business studies at the UOC, explains that “the Euribor anticipates the European Central Bank, to what it may do with interest rates.” With more inflation, the entity chaired by Christine Lagarde may be pressured to raise rates from the current 2.25% before the end of the year. Prices rise 2.9% year-on-year in the eurozone, suffering from more expensive energy and oil “and that makes everything more expensive,” which feeds the cycle, says Clarà. The outlook points to higher rates for longer, he warns, and “the first effect is on mortgages.”
The 3% figure will have a direct impact on borrowers with variable loans. Taking as a reference a mortgage of 175,000 euros, the average of the most recent month published by the National Statistics Institute (INE), at a variable rate, with a Euribor+0.99% reference and a 30-year term, those who have an annual review will go from paying 748 euros monthly to 835 euros, about 87 more per month or 1,044 per year. The impact is especially felt on younger mortgages, as it affects less in more advanced stages.
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Ricard Garriga, CEO of the comparison site Trioteca, states that most clients today opt for fixed-rate mortgages, “so today the Euribor matters less, but for those with a variable mortgage it is a problem,” he comments. According to INE data, six out of ten mortgages are signed at a fixed rate. Mixed mortgages are also included in the variable ones.
For Garriga, the best option now is fixed. Someone with a fixed mortgage at 2.5% – the average rate at which Trioteca closes deals – would face a payment of 691 euros. Compared to a variable mortgage, there is a difference of about 144 euros per month, or about 1,700 annually, which they would pay with a Euribor at 3%.
The impact is also felt on fixed rates due to the review of offers
Despite the savings, fixed rates also seem to be affected by the higher inflation outlook. In their case, the 15-year IRS, which today moves above 3%, serves as a guide. Yogi Thadhani, general manager in Spain of the mortgage manager Finteca, explains that as variable mortgages lose appeal due to the Euribor rise, entities raise rates on fixed and mixed mortgages to protect their margins, something they detect has been happening since May, with increases of between one and three tenths. For Garriga, it is possible that the fixed mortgage offer will close the year around 2.7%.
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