The Bank of Spain has confirmed that the Euribor rate, the reference index for most Spanish mortgages, ended January at an average -0.253%, compared to -0.263% in December, representing its fifth consecutive monthly rise. Despite this rebound, the market assumes the index will remain in negative territory at least until 2022,given that the European Central Bank is likely to maintain its expansive policy.
This completes six months of the index on a downward trend and more than three years negative.
The relatively poor performance continues. “So far this year, Spanish banks have been the worse performing subsegment in the universe of European banks we cover, with average fall of c.14% (total returns)”, analysts at Santander point out.
Ignacio de la Torre | The ECB’s deposit rate, which is now at -0.4%, will move to -0.2% during 2019 and later to 0%. At the same time, during the second half of 2019 the logical thing is for the ECB to begin to raise interest rates. These two factors should fuel a progressive rise in the Euribor from the summer of next year.
Yesterday, April 19, after being flat for months, with no pulse, the Euribor finally showed signs of life. It moved from the range of -0.190% (average for April) to -0.189%. One basis point.
The prolonged period of low interest rates in which we find ourselves has caused a complete shift in the mortgage market. Last year, coinciding with the key reference 12-month Euribor’s entry into negative territory, fixed rate mortgage loans represented over half the new loans contracted (53.3%), according to figures released by the Spanish Mortgage Association.
The 12-month Euribor, which is the reference used for the majority of variable rate mortgages in Spain, has been in an uninterrupted downwards trend since 2012 and is about to complete one year in negative territory. Analysts consensus is that the Euribor has already touched bottom, and that it will begin to rise gradually from the second quarter.
MADRID | The Euribor, at which most home mortgages in Spain are referenced, has fallen 0.001 percentage point in its daily rate down to 1.044 percent. This is the tenth consecutive occasion in which the inter-euro zone banking rate decreases to a historical minimum. Its average level in July was of 1.127 percent, one point less than a year ago, causing a significant reduction of mortgages’ total debt, on both new ones…