This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
Euribor for March 2007: 4.59%
Euribor – the interest rate most commonly used to calculate mortgage payments in Spain – rose strongly in March to 4.59%, reversing a trend of falling Euribor rates in the first 2 months of the year. This was the biggest monthly increase in Euribor since March 2006, and by the end of the month Euribor was well above 4.7%
Euribor is now 12% higher than it was a year ago, and the March rise means that borrowers on annually-resetting variable rate mortgages will see their annual mortgage payments rise by an average of 480 Euros. According to the National Statistics Institute the average Spanish mortgage has a value of €142,793, and a term of 26 years, which means a €40 rise in monthly mortgage repayments from €786 to €826.
Euribor is derived from European Central Bank (ECB) base rates, which were left unchanged at 4% in March. The ECB has made clear that controlling inflation remains its primary concern, warning that base rates may even have to rise to choke off inflation in the Euro zone. The ECB’s reiteration of its hawkish stance in March helps explain why Euribor has started to rise again after 2 months of declines. Euro Zone inflation reached 3.5% in March, well above its target rate of below but close to 2%. Inflation in Spain rose to 4.6% in March.
All of this means that falling mortgage rates are unlikely to ride to the rescue of the Spanish property market. If anything, mortgage rates in Spain are set to continue rising, putting further pressure on household budgets, and reducing demand for Spanish property.
© Mark Stucklin (Spanish Property Insight)
