Written by Canarian Weekly Business
HOMEOWNERS with a mortgage, having its annual review this week, will see their monthly payments drop again, now that the Euribor was set to end July at a new, historic low.
The Eurozone interest rate, upon which mortgages in Spain are based, will end the month on -0.282%, breaking the record low set in March 2018 of -0.191%.
From then, until March this year, the Euribor continued to rise, but only slightly, and remained in negative figures.
It has now been in negative for 41 consecutive months, and no interest rate rise has been put into place since 2011.
Last year, Spain’s homeowners were, in many cases, starting to consider switching to fixed-rate mortgages, because of the tiny but steady rise in the Eurozone interest rate, which experts had been warning of for some time.
Many feared it would rocket to its highest-ever level, which was 5.393%, achieved in July 2008. But the Central European Bank (BCE) has never introduced a sharp hike, and has long been keeping rates down to aid growth in the common currency area.
Its chairman, Mario Draghi, had been talking about a possible slight increase after the summer. But in March, he announced that there would be no plans to do so until at least the year 2020, because of a weakening in the Eurozone economy.
Some of the daily rates seen in July were fairly drastic drops: on the 24th, it fell to -0.321%, remaining below -0.3% for seven days.
It has not risen to 0% since February 2016, when it first fell into negative figures. And this time last year, the Euribor closed July on -0.18%, meaning mortgages set for their annual revision now will see a saving of approximately €4.50 a month, based on a €100,000 loan over a 25-year term.
A figure-and-loan term such as this would, typically, involve monthly repayments last July of €368.74, but a review of it this month would see this drop to €364.24.
But even if the Euribor shows signs of rising, mortgage-holders in Spain need not rush to apply a fixed rate because here, repayments are adjusted annually.
This means that if the Euribor starts to rise, homeowners have a full 12 months between reviews to decide what to do