Rise in Euribor, does it affect my mortgage or not?

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Euribor (acronym for Euro InterBank Offered Rate) is the most commonly used index for calculating the revision of variable interest rates in mortgages.

In variable interest mortgage loans, the interest rate at which the borrower must repay the amount borrowed is composed of a fixed percentage and a reference rate, which is usually Euribor.

The interest rate is reviewed every six months or annually, and varies according to the evolution of the index to which it is referenced, so that the monthly instalments to be paid by the mortgagor can go up or down.

This is why the relationship between Euribor and mortgage loans is close and binding.

What Causes Euribor to Increase?

rise in the euriborThe variations that occur in the Euribor are directly related to the economic operations that take place within the European territory.

In short, if there are not many transactions, i.e. there is little money in circulation, the Euribor rises. On the contrary, when there is a lot of monetary movement, the Euribor tends to fall.

What are the consequences of a rise in the Euribor?

Its rise has consequences that will affect a large part of the population, especially variable-rate mortgages.

But it also has other effects:

  • Decrease in consumption.
  • A rise in the cost of consumer and business loans.
  • An increase in delinquency.
  • And of course, the rise in mortgages, which we have already mentioned.

Does the rise in the Euribor only affect variable mortgages?

The rise in Euribor impacts both variable and mixed mortgages. However, fixed mortgages remain unaffected as financial institutions typically adjust their interest rates to make variable mortgages more appealing, indirectly shielding fixed-rate mortgages from the immediate effects of the Euribor’s fluctuations. This dynamic underscores the importance of understanding your mortgage type and its sensitivity to Euribor changes.

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