The shock waves from the credit crunch have driven Euribor – the interest rate most commonly used to calculate mortgage payments in Spain – up to 5% for the first time since November 2000.

Euribor moves on a daily basis, reflecting changing sentiments in the interbank lending market, but a monthly average is usually used for mortgages in Spain. Every day so far in May the daily Euribor rate has stayed above 4.9%, delivering a month-to-date average of 4.969%, compared to a full-month average of 4.820% in April.

If Euribor closes the month on an average of 5%, this will drive up monthly payments on a typical 170,000 mortgage by 60 Euros, or 720 Euros a year.

Euribor will not start to fall until the European Central Bank lowers base rates, and / or confidence returns to the financial markets. With Eurozone inflation well above target at 3.3%, the ECB is not expected to lower rates in the near future.