Mortgages in Spain depend on the Euribor rate
Mortgages in Spain depend on the Euribor rate.
Most Russian citizens are not familiar with this term. However, almost all Europeans who take out a mortgage loan to buy a home know about it. Euribor is the interest rate that EU banks set for mutual loans. Or, in other words, it is the cost of borrowed funds.
It is known that about 95% of all mortgages in Europe, including mortgages in Spain, have a variable interest rate. They are directly linked to Euribor. A floating interest rate linked to this indicator is slightly lower than a fixed one. However, the borrower runs the risk that the cost of the loan will change due to changes in Euribor. However, most Europeans prefer long-term financial commitments linked to this ratio.
The interest rate used in daily calculations is determined by 42 European banks. It is determined as the arithmetic mean of the interest rates of all banks and is based on the indicator provided by the European Central Bank. This process takes place every day with the help of the Reuters news agency. The initial data and the final result of the calculations are regularly published and are available to the public.
The Banking Federation publishes the coefficient value every month, on the 20th, in the Spanish Official Gazette Boletín Oficial Español. The country’s central banking authority recommends that all banks use this data to calculate interest rates on mortgages and consumer loans in euros. This information is especially important for those who have purchased a property in Spain with a variable interest rate, as they constantly monitor this data.
Mortgage rates continue to rise, making loans more expensive. Experts believe that this trend will continue for several more months.
The history of changes in Euribor since the onset of the global economic crisis clearly demonstrates the efforts of Europe’s largest banks to stabilise the financial climate in the region.
By the end of 2008, the coefficient reached its historical maximum – 5.50%. At the beginning of 2009, it fell sharply and by the summer had dropped to 1.50%. Only by November did this coefficient overcome its lower limit and began to rise steadily.
The sharp rate cut was a result of the financial crisis that was sweeping Europe and the world. To emerge from this collapse, the European Central Bank lowered its official rates, which also led to a reduction in Euribor. Thanks to this, many European borrowers, including Spanish ones, were able to pay much lower amounts on their mortgages during this difficult time.
The annual revaluation of interest rates has led to major changes in the size of mortgage payments for most Europeans.
If you are planning to buy a property in Spain, the mortgage rate is calculated using the formula: Euribor + X%, where X% is the so-called “margin” of the lender, which currently varies from 2 to 0.75%.
Today, a mortgage for purchasing real estate in Spain can be obtained under the following conditions:
- Floating rate — from 3.3% (Euribor + bank price 2.0-0.75%). 70% of the estimated value of the property is issued.
- Fixed rate — 4.1 ÷ 5.2%. Issued for a period of 5 to 40 years (age limit – 75 years).
Credit programs and credit conditions in Europe are constantly changing. Today you understand a little more why this is happening.
