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Mortgages in Spain increase by 250 euros with latest rate hike
In the last two years, mortgage repayments in Spain have risen by 64%
The Euribor continues its incessant growth and reached 4.15% at the end of July, meaning that around four million households in Spain could see their variable rate mortgages increase by as much as 250 euros per month. And the European Central Bank (ECB) has warned that it will continue hiking up rates in a desperate attempt to curb inflation.
The twelve-month average of the Euribor, which is the main tool used to update variable loan costs, exceeded the 4% barrier in June, something which hadn’t happened previously for almost 15 years. Worryingly, the last time this figure was hit was in November 2008, right before the world entered a global financial crisis.
This escalation has been going on since the end of 2021 and has brought many Spanish households to breaking point, who have seen their mortgage repayments shoot up by a crippling 64% in the last two years. Unfortunately, this is forecast to continue during the second half of 2023 and through all of 2024.
And while everything depends on the evolution of inflation, if things continue along the same vein, financial experts believe the Euribor will reach 4.5% by the end of this year.
The impact on the mortgage market in Spain is, quite frankly, staggering: The average percentage of home loans with an outstanding balance has gone from 1.14% in April 2022 to 2.86% in April of this year. What’s more, new mortgages being approved now have an average interest rate of 3.6%, more than double the figure that banks were charging this time last year.
Image: Freepik
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