The Euribor is about to close a tumultuous month. The index to which most variable mortgages in Spain are referenced galloped directly to break the level of 4% but the banking crisis unleashed by the fall of Silicon Valley Bank (SVB) stopped the escalation in mid-March and, for now, the assault is delayed. The increases, yes, continue and households that have to review their mortgage in the coming weeks will notice it in their installments.

With one day to go before the end of the month, the indicator registers an average of 3.652%, compared to 3.534% signed in February. The difference, however, could have been much greater had the trend with which March began continued. According to an estimate made by the mortgage comparator iAhorro taking the data before the bankruptcy of the SVB on March 10, we see that, if the Euribor had followed the same growth trend that it drew until then, of 0.2 points on average in just seven business days, it could have easily reached 4.1% on day 31. "And, the month began marking very high daily values: the ceiling was reached on March 9 with 3.987%, a figure that we had not seen since November 2008. However, from then on the daily Euribor was decreasing until it returned to register data from the beginning of the year, around 3.3%", says Simone Colombelli, director of Mortgages of the firm.

The gallop of the Euribor

The banking turbulence of recent weeks is behind the slowdown. The collapse of the SVB in the US infected the fear of a new credit crisis in banks around the world and has forced supervisors and regulators to intervene. The episode has brought to light the impact of the interest rate hikes that central banks have undertaken in the last year. Both the US Federal Reserve (Fed) and the European Central Bank (ECB) have tried to combat inflation in this way and planned to continue doing so in the same way before the banking earthquake. Now, once the market begins to digest the earthquake, future rate hikes are in question or, at least, it is questioned whether they will remain as strong and as fast as they have been.

The evolution of the Euribor is linked to the evolution of interest rates in the euro zone, so a slowdown in increases directly affects the mortgage indicator. "The market is starting to price in the end of rate hikes, as this banking crisis is also serving to cool inflation. Although the ECB held firm and rose 50 basis points at the last meeting, it is expected to soften the pace from now on. Investors expect increases of 25 basis points at the May, June and July meetings," explains Joaquín Robles, analyst at XTB.

If this roadmap is fulfilled, the Euribor would also stop the escalation that it has maintained for 14 months. In the last year alone, the index has gone from -0.237% to 3.534%; Never before had I registered such a sharp increase in such a short period of time.

Despite the recent slowdown, almost no one in the market doubts that it will end up consummating its assault on 4% before the end of the year. "Everything will depend on the evolution of inflation in the Eurozone and confidence in the financial sector. If it continues to skyrocket, it is very likely that the ECB will keep its rates up, which will increase the value of this mortgage index. On the other hand, if inflation is reduced a lot or a banking crisis occurs (something unlikely at present), the ECB will soften its policy and the Euribor will stagnate, "says Olivia Feldman, co-founder of the financial comparator HelpMyCash.

Robles, of XTB, expects the indicator to resume the upward path and return to around 4% in the middle of the year and in this line also points Colombelli, of iAhorro, who thinks that the Euribor "will reach 4% this spring".

In any case, the mortgaged who have to review the conditions of their loans with the reference of March will have to assume an increase in the installments. Taking as a reference an average variable mortgage of 150,000 euros to 25 years with an interest of Euribor plus 1%, the HelpMyCash portal calculates that if this loan is reviewed annually with the value of March, its installments will rise by about 297 euros per month (about 3,567 euros per year). On the other hand, if the update is semiannual, the monthly payments will increase by about 117 euros (about 702 euros per semester).

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