- This topic has 25 replies, 4 voices, and was last updated 15 years, 8 months ago by
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Apologise to mark for cutting & pasting from his news letter.
Many forum readers may not be aware that the Bank of Spain, whilst using a Euribor rate, also have anther rate that is the rates for private mortgages. Does anybody has any idea of:
1) How does this rate works ??? i.e. its mechanics and how close it is to the Euribor ?
2) Is this rate manipulated for political reasons ??
3) What are the commercial reasons for the Spanish Banks using different, bases if they are in the same so called competitive markets. ?
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Dont know Shakeel but the whole issue seems madness.
While interest rates are falling it seems they are not being passed on to help those with real problems and is being used to allow for defaults then how the hell is anyone going to find a way out.
With this approach then the Banks will have lots of property on their hands and the markets unable to recover.
Seems like the normal 😈
The banks have messed up big style and in particular Spain with mortgage guarantees and is a case of 2 fingers up.
All they are going to do by the looks of it is when they like the U.K get the tax payers money they are simply going to use it be re- balance their own books.
This makes anything governments do as rather worthless as far as I can see.
Perhaps I am being rather simple here.
Your the accountant am I looking at this in the correct manner.Regards
Just Frank 8)Better post another joke. 😆
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Shakeel, like other central banks Euribor interest rates are calculated in many different ways; ie overnight, daily, weekly, monthly etc up to what we call in Spain Euribor a un año – Euribor one year …… All Spanish banks and cajas use one of these rates; ie not the central bank figure that Mr Trichet changes from time to time. Most Spanish banks use the one year figure which has lately been 1,5% higher than the “Trichet” rate; in addition your bank will recalculate your rate on your mortgage anniversary (normally once a year) eg : if your anniversary is 6 january then they will take euribor one year on the 6th of DECEMBER (One month before your “birthday”) and fix your rate at the differential agreed (ie 1% over ) for the next year.
Basically, the customer gets shafted again and does not enjoy the recent rate reductions – most young Spaniards have just re fixed at gross rates of 6%
the Spanish banks do this because they can!!Another reason for one of your diatribes against this country and its ways !!
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“Your the accountant am I looking at this in the correct manner.”
Its a common mistake to compare an accountant to a calculator or a mathematician, which I can handle. But to be compared to a banker in a current climate is being compared to an estate agent, second hand car salesman or a double glazing salesman. I will not hold this against you Frank.UBEDA: I am aware that there are various periods, However the lenders mostly use monthly or three monthly rates. My question is why does Bank of Spain sets a separate rate for the house purchase and what is the thinking behind it.
The banks & their spread is a different issue and yes you can add that one as well. As a masochist, I still love the people & the Country.
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Hi Shakeel
Thanks 😀
You posted .
But to be compared to a banker in a current climate is being compared to an estate agent.MMmmmm . Yep dont I know how bad that is even though I havent been one for a few years. 🙁
Noticed you have had some flack of late.
The tin hat is available on favourable rental terms 😉Just Frank 8)
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Frank, I forgot the “tin hat” dealers are quite close to the professions I have mentioned,
Yes, I have had some flack, I can take it, I am a gown up person. I think with my views & outspoken postings, I had done rather well for the 2008.
Neither a hat or a bunker was called upon. Early days as far as 2009 goes.
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Shakeel
Well at least you have your own views and prepared to post even though you get stick at times. 😉
Yep the tin hat is available to rent from those professions as well and in particular to those that are professional in what they do.
Well the offer is always open as those that do pop their heads over the parapet do get stick at times.
The important thing is that everyone should be able to have their say and even if we dont agree on some issues then thats O.K and move on.
These long term grudges(YAWNnnnn) have no place and in particular to those we have never met and are often due to a simple posting that someone has taken completely the wrong way .
There are so many real issues that effect many and in this forum it relates to Spanish Property which I have daily tangible interest in regarding myself and a group that I refer to as we at times.
Like you I have my own views that some agree with and some dont and one thing for sure is that those that dont aint going to change them unless they are based on reason.Just Frank 8)
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“Well at least you have your own views and prepared to post even though you get stick at times.”
When, has sitting on the fence, got one far in life ???
“Yep the tin hat is available to rent from those professions”
Thank you for your kind offer.
“The important thing is that everyone should be able to have their say and even if we don’t agree on some issues then that’s O.K and move on”
Fully, agree. Try and convince those who have a personal agenda or lacks maturity to accept others points of view.
OK, lets get back to the topic, as I need to have the Bank of Spain’s thinking on setting a separate Euribor for domestic mortgages.
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Shakeel, ALL banks use the interbank Euro rate as the basis for lending to the public; as i mentioned before they mostly use euribor 1 yr with a few using 1 month, 6 months etc – as stated in the buff section.(this rate is published in the bank of spain website, reuters etc etc……..
Maybe there is a “special” mortgage rate for government assisted purchasers – ie VPO housing – but it’s not used for normal home or commercial property purchases
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UBEDA: Fully agree with you as to the range of mortgage and there basis.
I do not think that rate would apply VPO, etc. I have a friend whose mortgage is applied with that particular product & he is not a VPO.I am trying to obtain the attachment to BOS, website, that gives the rates. As soon I have it I will post it.
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I’m not sure if this can help:
The euribor is published DAILY by the ECB (European Central Bank), but the euribor used as official reference rate for mortgages is published MONTHLY as the average of the rates of the working days in each month.
The banks usually establish to use the EURIBOR OFFICIAL MONTHLY RATE published two or three months before the renewal, and will use that reference until the following revision.
This means that if the rate is falling, a customer can suffer a rate much higher than the current EURIBOR; but do not forget that also can happen the opposite, if you are so lucky to have the revision just before a strong increase of the interbank rate. Unfortunately, today is much more probable the first case.
Do not forget that nearly all the mortages also establish a percentage over the reference interest rate, called “diferencial”, (usually from 0,3% to 2%). The sum of both percentages gives you your real nominal rate.
Of course, there are other official reference rates, but all of them are historically higher than the EURIBOR.
The Bank of Spain has a useful website http://www.bde.es (also in English) and a banking customer website http://www.bde.es/clientebanca/ (only Spanish by now)
At last, I apologize for my English.[/b] -
I’m not sure if this can help:
The euribor is published DAILY by the ECB (European Central Bank), but the euribor used as official reference rate for mortgages is published MONTHLY as the average of the rates of the working days in each month.
The banks usually establish to use the EURIBOR OFFICIAL MONTHLY RATE published two or three months before the renewal, and will use that reference until the following revision.
This means that if the rate is falling, a customer can suffer a rate much higher than the current EURIBOR; but do not forget that also can happen the opposite, if you are so lucky to have the revision just before a strong increase of the interbank rate. Unfortunately, today is much more probable the first case.
Do not forget that nearly all the mortages also establish a percentage over the reference interest rate, called “diferencial”, (usually from 0,3% to 2%). The sum of both percentages gives you your real nominal rate.
Of course, there are other official reference rates, but all of them are historically higher than the EURIBOR.
The Bank of Spain has a useful website http://www.bde.es (also in English) and a banking customer website http://www.bde.es/clientebanca/ (only Spanish by now)
At last, I apologize for my English.[/b] -
Legally,
I have come accross mortgage based on MIBOR ( Madrid inter bank ….) One of them has been taken out in 2004 i.e. well after the introduction of €/Euribor.Can you please explain
1) why lenders had based their spread on MIBOR ?
2) Generally is MIBOR higher/lower than Euribor ?
3) What website if any, can provide me the MIBOR rates ???
Many thanks
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Legally,
I have come accross mortgage based on MIBOR ( Madrid inter bank ….) One of them has been taken out in 2004 i.e. well after the introduction of €/Euribor.Can you please explain
1) why lenders had based their spread on MIBOR ?
2) Generally is MIBOR higher/lower than Euribor ?
3) What website if any, can provide me the MIBOR rates ???
Many thanks
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Yes, Shakeel,
MIBOR (Madrid Inter Bank Offered Rate) the Spanish national reference rate, has been generally replaced with the EURIBOR (European Inter Bank Offered Rate) since the introduction of the EURO. So most of the mortgages (like mine) since then are referred to EURIBOR. However, the MIBOR is still published and you can see the data series in http://www.bde.es/infoest/a1901.pdf
Logically, as you can see, both rates are very similar, but not equal. -
Yes, Shakeel,
MIBOR (Madrid Inter Bank Offered Rate) the Spanish national reference rate, has been generally replaced with the EURIBOR (European Inter Bank Offered Rate) since the introduction of the EURO. So most of the mortgages (like mine) since then are referred to EURIBOR. However, the MIBOR is still published and you can see the data series in http://www.bde.es/infoest/a1901.pdf
Logically, as you can see, both rates are very similar, but not equal. -
Thank you for your reply. Do you know why MIBOR is still being used ??.
Do the bankers get together and set a Euribor and a MIBOR rate everyday. Surely MIBOR has no relevance as long Spain is in the EURO.I know that you are Lawyer & not a Banker. I however find this valuable commercial information.
The link that you gave is for yearly MIBOR Rates, What about the monthly or three monthly rates. ?
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Thank you for your reply. Do you know why MIBOR is still being used ??.
Do the bankers get together and set a Euribor and a MIBOR rate everyday. Surely MIBOR has no relevance as long Spain is in the EURO.I know that you are Lawyer & not a Banker. I however find this valuable commercial information.
The link that you gave is for yearly MIBOR Rates, What about the monthly or three monthly rates. ?
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As MIBOR is a rate that shows the price in what Banks and Credit Institutions lend and borrow money one to other, there are so many in Europe as Money Markets, (like LIBOR, London Inter Bank Offered Rate), but into the EURO ZONE the essential is, logically, the EURIBOR. The other rates follow the way of this, with minimum technical differences.
Mibor is still published, and for some little Banks is more familiar because they get money from the domestic money market, but I sincerely believe that there is no special reason to choose it instead of EURIBOR. Anyway, I’ll try to check it.
Don’t worry, I’m a Lawyer, but I’m also a civil servant of the Bank of Spain that left for absence.
The other rates can be found at http://www.bde.es/infoest/ti_1_7.pdf
One, Three, Six and Twelve months. And also rates from UK, USA and Japan (shows the official rates).Daily rates are at http://www.bde.es/infoest/ti_1_2.pdf. The normal rates are on the first block.
Take into account that these rates are technical ones for banks, not official for customers.
I hope this can help.
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As MIBOR is a rate that shows the price in what Banks and Credit Institutions lend and borrow money one to other, there are so many in Europe as Money Markets, (like LIBOR, London Inter Bank Offered Rate), but into the EURO ZONE the essential is, logically, the EURIBOR. The other rates follow the way of this, with minimum technical differences.
Mibor is still published, and for some little Banks is more familiar because they get money from the domestic money market, but I sincerely believe that there is no special reason to choose it instead of EURIBOR. Anyway, I’ll try to check it.
Don’t worry, I’m a Lawyer, but I’m also a civil servant of the Bank of Spain that left for absence.
The other rates can be found at http://www.bde.es/infoest/ti_1_7.pdf
One, Three, Six and Twelve months. And also rates from UK, USA and Japan (shows the official rates).Daily rates are at http://www.bde.es/infoest/ti_1_2.pdf. The normal rates are on the first block.
Take into account that these rates are technical ones for banks, not official for customers.
I hope this can help.
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Thank you for your reply. As you are ex Bank of Spain ( BOE) & a Lawyer. What do you think of BOE, view of the Banks that are reneging on Guarantees.
To me it is the same as a business renege on “lettras” i.e. the good faith & the financial security that these instrument provide gets undermined.
As you are aware that for practical purposes a Guarantee is as good as the provider or the Guarantor. If a third party accepts a Bank guarantee & the bank does not honour than surely the Banks standing & worthiness can be questioned including its rating with the Financial circle, e.g Moody & others. -
Thank you for your reply. As you are ex Bank of Spain ( BOE) & a Lawyer. What do you think of BOE, view of the Banks that are reneging on Guarantees.
To me it is the same as a business renege on “lettras” i.e. the good faith & the financial security that these instrument provide gets undermined.
As you are aware that for practical purposes a Guarantee is as good as the provider or the Guarantor. If a third party accepts a Bank guarantee & the bank does not honour than surely the Banks standing & worthiness can be questioned including its rating with the Financial circle, e.g Moody & others. -
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The link to the MIBOR is in one of my previous replies, it is
“Yes, Shakeel,
MIBOR (Madrid Inter Bank Offered Rate) the Spanish national reference rate, has been generally replaced with the EURIBOR (European Inter Bank Offered Rate) since the introduction of the EURO. So most of the mortgages (like mine) since then are referred to EURIBOR. However, the MIBOR is still published and you can see the data series in http://www.bde.es/infoest/a1901.pdf
Logically, as you can see, both rates are very similar, but not equal.”The OFFICIAL legal rates in Spain for mortgages are published only by the Bank of Spain and sent to the “Boletin Oficial del Estado” to have legal strength.
The European Central Bank, logically, publishes the Euribor that is a european rate, but mortgages are not directly referred to it.
You can find the rates in many other websites, but are copies, not the official originals. -
The link to the MIBOR is in one of my previous replies, it is
“Yes, Shakeel,
MIBOR (Madrid Inter Bank Offered Rate) the Spanish national reference rate, has been generally replaced with the EURIBOR (European Inter Bank Offered Rate) since the introduction of the EURO. So most of the mortgages (like mine) since then are referred to EURIBOR. However, the MIBOR is still published and you can see the data series in http://www.bde.es/infoest/a1901.pdf
Logically, as you can see, both rates are very similar, but not equal.”The OFFICIAL legal rates in Spain for mortgages are published only by the Bank of Spain and sent to the “Boletin Oficial del Estado” to have legal strength.
The European Central Bank, logically, publishes the Euribor that is a european rate, but mortgages are not directly referred to it.
You can find the rates in many other websites, but are copies, not the official originals.
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