Euribor exceeds 3.6% in March despite the ups and downs of the banking crisis

He euribor up to twelve months, the indicator most used in Spain to calculate quotas mortgagesgrows again in March, until a average rate of 3.647%and streaked fifteen consecutive months of progress, despite the ups and downs recorded after the banking crisis that broke out with the bankruptcy of Silicon Valley Bank (BLS) in the United States.

The strong fluctuations of the Euribor in March caused a milder growth of the index than in previous months, and so far it has moved away from the rate of 4 percent, which, according to experts’ estimates, it would exceed this month.

Last Euribor reached a daily value of 3.978% on March 9, the highest since 2008. after the chairman of the US Federal Reserve (fed), Jerome Powell, confirmed that the institution is ready to accelerate rate increases if the economic data justify it.

Also the President of the European Central Bank (ECB), christine lagardein the previous days, he assured that interest rates would rise in March and in the following months.

But on March 9, alarm bells rang in the USA after the collapse of the SVB bank. Fear of a possible contagion in the sector has sunk stock markets around the world.

A few days later, another bank in the US also went bankrupt, SignatureBankand the third was saved, First Republic Bankwhile the Swiss Credit Suisse bought UBS with the approval of the authorities.

As a result of the banking crisis, stock markets crashed and investors fled into safe-haven assets such as fixed income.

This caused an increase in the price of bonds, a decrease in their profitability and a downward movement of the Euribor, which during those days fell to its lowest level since January, at a daily rate of 3.322 percent.

In this context, the market expected that central banks would have to ease their monetary policy.

However, despite the financial turmoil, ECB it kept its roadmap and raised interest rates by 50 basis points on the 16th, while the Fed raised them by 25 basis points on March 23.

After the increase in the price of money and the lull in the banking sector, the Euribor rose again and closed the month at a daily rate of 3.622 percent.

The monthly average, which is used to review mortgages, ended at 3.647%, compared with 3.534% in February. Growth in March was 113 basis points, the lowest since the same month last year.

inflation in the eurozone

The co-founder of financial comparator HelpMyCash.com, Olivia Feldman, explains that after the Euribor stagnated in March, its development will depend on confidence in the financial sector and inflation euro zone, that in March it fell by 1.6 points, from 8.5 to 6.9%. However, the prices of food and processed products continue to rise, Eurostat announced this Friday.

“If inflation continues to rise, it is very likely that the ECB will continue to raise rates, which will increase the value of this mortgage index. On the other hand, if inflation drops significantly or a banking crisis occurs (which is unlikely today), the authority will ease its policy and Euribor will stagnate.

Despite the more moderate increase in March, variable mortgages that have to be reviewed with this month’s data will rise again, as a year ago the Euribor was still negative, at -0.237%.

For a mortgage with an average amount of EUR 142,654 (January data from the Central Bureau of Statistics, INE) with a repayment period of 25 years and Euribor plus 1% interest, the fee is EUR 804.9 per month.

Compared to March 2022, this means an increase of 282 euros per month and 3389 euros per year.

In the case of a mortgage of 300,000 euros, with the same conditions, the increase will be around 593 euros.