Fernando González Urbaneja | Last week the Euribor started to trade in positive, five thousandths of a point insignificant, but positive. Since February 2016 the Euribor had been negative, down to a minimum of half a point. Several million Spanish mortgages will be more expensive today than yesterday, although less than tomorrow. The European Central Bank opted weeks ago for a progressive and cautious strategy towards the neutrality of its monetary policy as an activism against inflation. This policy is less intense than that of the Fed in the United States, but in Europe, the recovery is more compromised than there and two objectives must be combined. Growth and price control.
The effect of a higher cost of monthly mortgage repayments will be similar to that of the sudden rise in fuel prices that reduces families’ purchasing power, although it does not affect the CPI. That this was going to happen is well known, although it is forgotten until it does happen.
Are there preventive measures to lessen the impact? Of course they can; especially when there is time and palliatives can be applied. For example, banks can be instructed (and facilitated in contracts) to lengthen mortgage terms to contain monthly repayments. This requires awareness of the problem, understanding by debtors and wise management by creditors.
Some will try (it is fashionable and the government likes it) to subsidise these rising interest rates. This would be a bad solution, but it is to be expected with the prevailing culture of having someone else (preferably the state) solve the problems. The growth of interest rates is a fact rather than a hypothesis. It can be estimated that soon the differential between the new rates and those of a year earlier will be more than one point, which for mortgages of €150,000 could mean an additional €130 in each monthly instalment.
Explanations and prevention would be useful, people are angry, restless and aspire to having fewer problems and more solutions.
