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 just keeps plumbing new depths
Euribor (12 months), the interest rate most often used to calculate mortgage repayments in Spain, fell to 0.618pc in October, the lowest level on record, and 71pc lower than October last year.
Until as recently as July, Euribor had never fallen below 1pc. Now it seems to be in freefall, heading for 0.5pc. It’s rate of fall has accelerated in the last 3 months, and analysts expect it to continue falling in the next few months.
All of which is good news for hard-pressed Spanish borrowers. As a consequence of the latest fall in Euribor, interest payments on a 25-year, €120,000 mortgage at Euribor +1pc will fall by about €1,000/year.
Mike says:
An eurobor rate in freefall”should” be good news for home buyers in Spain – but just which bank IS giving mortgages?
Well apart from on the huge portfolio of re-possessed properties or where keys have been surrendered.
Rather a different complex.
Steve Watling says:
My mortgage has a ‘floor’ of 3%, so makes no difference how low the Euribor drops below this, unfortunately. I assumed that most banks did the same, but if my bank (CajaCanarias – soon to be La Caixa) are unique in this respect maybe I should switch lenders. If anybody has a mortgage with no floor I would be interested in knowing the name of their bank!
Mike says:
Hi Steve
Join the Club – AND the queue.
Believe it Steve – CajaCanarias ARE NOT the sole bank adopting a “minimum rate” policy.
From borrowers that I speak to, most of the banks adopted a similar strategy – at least for the foreign buyers – the native Spanish had the ability to understand all the small print: to employ reputable Solicitors, AND the wit to appreciate that there were two tiers of mortgage in being.
One does not have to wonder too hard why there are so many keys now being thrown back at the banks by foreign buyers – ie the peope who paid 350k for a property which is now unsellable at 80K: who had originally a 50% mortgage, but now a 200+% one: who’s paying a mortgage rate 6 times higher than the going rate, and with a bank who can think of no more than saying a blunt No to any request for variation or even an negotiated “arrangement” to pay less for longer.
This why the banks in Spain are up that well known Creek, and they’re still steaming at Full Speed Ahead, even further up.