Euribor Rate

[La Vida]

The problem is that the majority of mortgages taken out in Spain are linked to the 12 month Euribor, for example if your mortgage started in November 2006, each November this will be adjusted and then it will not be reviewed until November 2007.

No matter what happens during the year with the Euribor (this changes daily). Your rate is fixed, sometimes you win and sometimes you loos.

If you have been a good customer of the bank it is worth trying to negotiate a better deal when you get near your review date.

It is possible to obtain 1 month, 3 month and sometimes 6 month.

Henry Slade

La Vida Mortgages

[Dave]

Euribor Rate Continues to Fall:

The Euribor rate closed the month of February at 2.1%, the lowest monthly rate seen since June 2005.

This lower Euribor rate, used to calculate most mortgages in Spain, will see those that have their mortgages reviewed in March save €2,500 per year if they have an average mortgage of €160,000 over a 20-year term. The Euribor rate is expected to continue to fall, especially since the announcement of the slashing of interest rates.( Costa Calida informer )

[stewart]

Hi Dave
thats good news

lynne

[Dave]

It is good news Lynne, great for all those due to complete soon . Talking with the chap at Bancaja who we deal with, the rate should be lower still when we come up for our 12 monthly review soon  .

The figure used to calculate our mortgage for the next 12 mths, will be taken from the Euribor rate in April 09, although we completed in June 08 so we where told .

Dave

[Dave]

The Euribor closed last week at the lowest level in its history, and then started this week plumbing new lows, touching a daily rate of 1.919% on Monday. At this rate Euribor looks set to close March at 1.959%, below the previous record low of 2.014% in June 2003. (kyero.com 19th March)

Dave

[La Vida]

It has just come to our attention that some of the banks in Spain are not playing ball regarding the interest rates on new mortgages. (no surprises there)

It's the small print issue and new borrowers should be aware that they are putting a minimum rate into the deal.

For example “the offer comes out at Euribor + 0.75%” looks good, 12 month Euribor today is 1.85% + your 1%, total 2.6%, even better. NO, because the minimum is 4.75%!!!
Please get your broker or you solicitor to look at the SMALL PRINT.

Henry
La Vida Mortgages SL

[terrypat10]

Hi Henry it is terry chipman,when I last contacted you 3 weeks ago your email said you would get back to me in 48 hrs,is there a problem I have not heard from you since,

[La Vida]

Hi Terry,

i am so sorry, some how this has slipped the net, i am on the case now and you will receive an email from me today.

Henry

La Vida Mortgages

[Sandra]

Courtesy of www.bbc.co.uk. 2 April 2009

The European Central Bank (ECB) is expected to cut interest rates in the eurozone to a record low of 1%.

The ECB has already cut its key rate five times from 4.25% in October 2008 to 1.5% in March as it tries to boost economic activity.

The unemployment rate in the eurozone rose to 8.5% in February, its highest level in almost three years.

Economists are also waiting to see if the ECB follows other central banks in moving towards quantitative easing.

Both the Bank of England and the US Federal Reserve have introduced quantitative easing - whereby they increase the amount of money in the system - as they try to counter the economic downturn.

It was confirmed in November last year that the eurozone was officially in a recession.

The ECB has said that it expects GDP in the 16-nation bloc to shrink between 2.2% and 3.2% this year.

But the Organisation for Economic Cooperation and Development (OECD) predicted this week that the eurozone economy would contract by 4.1%.

The OECD also warned that the unemployment rate could rise to almost 12% in 2010.

[Dave]

Spanish Homeowners Face First Mortgage Rise in Two Years

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, has now risen for 5 consecutive months to its highest level in more than a year.

Euribor reached 1.421% in August, an increase of 3.5% on the previous month, and 6.5% higher than August last year.

As a result, borrowers on annually resetting mortgages will have to start paying more. Repayments on a typical annually resetting mortgage (150,000 Euros, 25 years) will rise by around 6 Euros/month, or 70 Euros/year, to around 594 Euros/month.

This is the first time that Euribor has risen on an annualised basis since October 2008, when the credit crunch first griped the markets. Interest rates then tumbled as central banks poured money into the banking system. Rates are now starting to rise as investors fret about a fiscal deficits and inflation.

New mortgage lending

New residential mortgage lending fell 10.8% in June compared to the same month last year, according to the National Institute of Statistics (INE). This is the second month in a row that new mortgage lending has fallen. New mortgage lending is a key indicator of spirits in the housing market. 2 months of declines is not a good sign.

There were 55,143 new mortgages signed in June, just a fraction down on May, so at least on a monthly basis the news was better. Accumulated over the first half of the year, lending was down just 0.5% compared to last year.

The average loan value for property in Spain in June was 119,547 Euros, up 1.4% on last year, and 4% higher than May, suggesting that banks are being more selective about who they lend to, but then lending more to those they do.

Overall new residential mortgage lending was 6.6 billion Euros, down 9.6% on last year.

The average interest rate was up a fraction on May at 3.93%, and down 12.1% compared to June last year.(kyero.com)

[Dave]

A summary of the Latest Euribor and Spanish mortgage news

Euribor (12 months), the interest rate generally used to calculate mortgage repayments in Spain, rose to 1.714pc in February, from 1.55pc in January, a monthly change of +10.6pc.

On an annualised basis, Euribor is 39.9pc higher than it was a year ago (see graph above), meaning higher monthly repayments for borrowers with mortgages resetting now.

Repayments for a typical mortgage (150,000 Euros, 25 years, Euribor +0.25) will go up by around 35 Euros /month, or 400 Euros / year. That will punish many stretched household budgets in Spain.

New Mortgage Lending

The final figures for 2010 show new mortgage lending fell by an annualised 7.4pc in 2010 (volume), the 4th year in a row of declining lending.

Looking for something positive to say about this, at least the decline has slowed down compared to the fall of 22pc in 2009 and 32pc in 2008.

Overall lending was down 7.8pc in value terms, with the average residential loan value last year at 116,860 Euros, down 0.8pc compared to 2009.

The average new mortgage interest rate was 3.87pc, down from 4.59pc in 2009.(Spanish Property Insight)

[Dave]

Euribor rate rises:

The Euribor rate, used to set most Spanish mortgages, has jumped to 1.924% at the start of March, having ended February at 1.773%. Much of the increase has come after the European Central Bank Chairman, Jean-Claude Trichet, said that he expected interest rates to rise in April. Such an increase in the Euribor means €400 more a year in mortgage payments on an average agreement. Various financial advisors consider that the Euribor could be back up to 2.5% by the end of the year.

[Dave]

Banks forced to scrap minimum level clause:

Nearly four million mortgages in Spain are subject to the controversial ground clause, which means that even if a mortgage was signed at Euribor plus a percentage, the mortgage holder would never pay lower than the ground clause even if the Euribor hits rock bottom.

Most of those affected do not realise that they are paying about €5,000 extra a year to the banks and savings banks because of the clause. The ADICAE, Spanish Association of Bank, Savings Bank and Insurance Users, has proposed a congress to discuss a limit to such clauses.

It is estimated that between 10% and 20% of property repossessions would not have been necessary if the clause did not exist. It is expected that in April all banks and savings banks will be forced to remove the ground clause, which will effectively mean mortgage holders will be paying exactly what they signed up for, Euribor plus a percentage, which generally ranges from 0.5% to 2%. ( Costa Calida Informer)

[Dave]

Mortgages set to rise:

The Euribor rate has ended March at 1.924%, taking the annual payments on an average mortgage being revised right now up by €600. This is the highest level for the past 25 months since February 2009 and is now 0.7% higher than the all time low reached in March 2010.

The Euribor began April at 2%, meaning that for the first time ever it is double the base bank rate in the Eurozone. Experts consider that it will have reached between 2.25% and 2.6% by the end of the year. ( Costa Calida Informer)

[Dave]

Mortgage repayments set to rise:

The Euribor has ended July at 2.183%, its highest level since January 2009, which will put up mortgage payments on an average loan of €150,000 by €61 a month, or €783 a year.

This is bad news for those whose mortgages are being reviewed in August. Analysts say that they expect more increases and are advising homeowners to start to save at least €70 per month in preparation for more Euribor rate rises.

Banks and Cajas are still taking the "Michael":

Homeowners with a minimum clause on the percentage rate of their mortgages are still paying above the odds, despite an earlier court ruling to scrap it. Whilst the Euribor rate is steadily climbing it is still relatively low at just over 2% and has been at just over 1% for much of 2009 and 2010.

This means that the minimum percentage clause has netted the banks and cajas a huge profit since December 2008 when the Euribor was at 3.45%.

The banks and cajas have appealed the decision and by doing so have delayed their obligation to remove the minimum clause. This means that mortgage holders who signed an average agreement for Euribor +1%, but have a minimum 4% clause in place have effectively been paying approximately €100 per month extra since at least 2009.

If the courts decide to rule in favour of mortgage holders and also refuse the banks and cajas leave to appeal this will be good news for homeowners, but they will still have lost out as the banks and cajas will not be obliged to back-date the payments to the original ruling date in March of this year. ( Costa Calida Informer)