Eurozone mortgage base rates in May spent a fourth consecutive month in negative territory, though borrowers are unlikely to enjoy much of a benefit (and savers certainly won’t). The banks are getting hammered by negative interest rates.

12-month Euribor – the rate used to calculate most mortgage repayments in Spain – came in at -0.013 in May, down from -0.01 in April, meaning another month of negative Euribor interest rates.

On an annualised basis Euribor was down 107.9%, and by 30% on a monthly basis.

In the short term it should mean that existing borrowers with an annually resetting mortgage (and no floor clauses) will see their mortgage payments fall by around €9 per month for a typical €120,000 loan with a 20 year term.

Francisco González, president of BBVA, Spain’s second biggest bank, recently said that negative interest rates “are killing the banks.” Some banks are reportedly considering raising their mortgage rate spread to earn more, and one has done so, but unless they all do it those who raise rates will lose market share. However, they can’t go on like this, so I suspect the era of cheap mortgages will come to an end.

MORTGAGE MARKET

The number of new residential mortgages inscribed in the Property Register in March was up an annualised 14.5% to 22,938, reveal the latest figures from the National Institute of Statistics (INE). The rate of growth slowed slightly compared to February, nevertheless mortgage signings have increased for 22 consecutive months based on the INE’s figures.

The biggest volume of new mortgage loans was in Andalusia, followed by Madrid and Catalonia.

GUIDE: Everything you need to know about mortgages in Spain