This is how variable-rate mortgages would become more expensive if the ECB raises rates sharply to combat inflation

A skinny dog ​​is all fleas, they say. And the truth is that in the economic sphere it seems that this is what is happening. to the boom of the energy priceswho has shot inflation and, with it, the rest of the prices, joins one more ingredient that had been going unnoticed for a long time.

We talk about Euriborthe mortgage indicatorwho just now (at the worst time) has decided to turn around and get positive for the first time in the last six years.

It is no coincidence seeing the context of crippling inflation that Europe is experiencing, since it seems that this change in trend seems to anticipate what is to come: a rise in interest rates to contain this inflationary maelstrom.

This means, therefore, that mortgages will rise floating rate. Those that since 2016 have benefited from negative rates that lowered mortgages. Now, touch the other side of the coin, and it’s not pretty.

What can happen if the ECB opens the tap

Although this rise in the Euribor is only 0.005%, but it is an indication that from now on it will be recovering ground, waiting for the ECB to act by raising rates to contain the rise in prices.

Thus, people who have a variable rate mortgage will already be trying to calculate how much their mortgage can raise, and we have decided to do the work for them.

Let’s put ourselves in three different scenarios: a Euribor at 3%, 5% and 10%. Let’s try to see all possible scenarios.

Bearing in mind that the average mortgage in Spain is 141.427 eurosaccording to the latest data from the INEwe are going to see how much can be increased with this change in the Euribor.

if it gets in 3%, would mean an increase to 784.35 euros if we take a 20-year mortgage as a reference. Now we go with a Euribor al 5%, We put ourselves in a monthly fee of 933.36 euros.

If we put ourselves in the worst, Euribor at 10%we would pay an average of 1,364 euros per month, a figure that is totally out of hand.

Therefore, gentlemen, this is what can happen, on average, if the Euribor shoots up. We don’t know if he’s up to those levels, but it’s clear that he’s going to go up. I hope that by then the very high inflation will have been contained a little.


Source: El Blog Salmón by www.elblogsalmon.com.

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