Euribor rates rose sharply in September and will severely penalize those whose mortgages are renegotiated next month. View simulations
October should be a month of pleasant surprises for most Portuguese. Most of them will receive 125 euros in state support to cope with the effects of inflation. Those with children under the age of 24 will receive 50 euros for each child. And pensioners will receive a supplement equivalent to 50% of their pension.
But October has other surprises to consider financially. These are not at all positive. For many, gas and electricity prices will rise. And the Portuguese with mortgages, whose contracts will be renegotiated next month, are in for the worst of the unpleasant surprises: their house down payment will increase significantly.
This is because the overview of the contracts of those with a home loan is based on the average of the respective Euribor for the previous month, which it uses as an index. And in September, both the three-month-old Euribor, and the six-month-old, and the 12-month-old Euribor behaved the same way: they grew a lot. This is, in fact, the first time that the effect of positive euribor rates will be felt. This leads to an increase in the payment in October, which may exceed 200 euros.
But the bad news doesn’t end there, as these values are expected to continue rising in the coming months. This is because the Euribor rates are closely linked to the changes in interest rates made by the European Central Bank, and this Wednesday the body controlled by Christine Lagarde. gave an indication of a new increase in October, which may reach even 0.75 points.
Increases from 95 to 200 euros
Contracts indexed to the six-month Euribor, which make up the largest share of home loans in Portugal, will for the first time feel the impact of the rate in positive territory, where it has remained since June 6. And this is the second review this year.
This means that for a loan of 150 thousand euros for 30 years with a spread of 1% and an average Euribor rate for September, the monthly payment will be 600.51 euros, which is 146.44 euros more than has been paid since the last loan review. . Corresponds to an increase of 32%.
The six-month average Euribor rose from 0.466% in July to 0.837% in August, and in September it stands at 1.596%. The six-month Euribor has been negative for six years and seven months (from November 6, 2015 to June 3, 2022).
|
installment in October |
|
|
150 thousand euros, 30 years, spread 1% |
|
|
Euribor 6 months |
|
|
pays |
454.07 |
|
go pay |
600.51 |
|
Increase |
146.44 |
Those who have contracts indexed to 12-month Euribor and who will experience an increase in interest rates for the first time in 2022 will experience a larger increase. Since the contract is renegotiated from year to year, its holder will have to pay plus 201.72 euros in installments at home when you have to deliver 651.16 euros to the bank. In the last 12 months I have paid 449.44 euros. Corresponds to a 45% increase.
After soaring to 0.005% on April 12, positive for the first time since February 5, 2016, the 12-month Euribor has been above 0% since April 21. Its average also rose from 0.992% in July to 1.249% in August. And in September, the average figure is already at the level of 2.33%.
|
installment in October |
|
|
150 thousand euros, 30 years, spread 1% |
|
|
Euribor 12 months |
|
|
pays |
449.44 |
|
go pay |
651.16 |
|
Increase |
201.72 |
On the other hand, in contracts indexed to the three-month Euribor, the effect will be smaller, but closer to one hundred euros. The amount will rise to 561.96 euros, which is 95 euros more than in July. The increase corresponds to an increase of 21%.
This year, this is the third upward revision of this type of contract, they were paid another six euros in April and another 17 euros in July.
The three-month Euribor was negative between April 21, 2015 and July 13, 2015 (seven years and two months). The three-month average Euribor rose from 0.037% in July to 0.395% in August and currently stands at 1.011%.
|
installment in October |
|
|
150 thousand euros, 30 years, spread 1% |
|
|
Euribor 3 months |
|
|
pays |
466.10 |
|
go pay |
561.96 |
|
Increase |
95.86 |
Euribor began to rise more significantly since February 4, after the European Central Bank (ECB) admitted that it may raise key interest rates this year due to rising inflation in the eurozone, a trend that has accelerated with the start of Russia’s invasion of Ukraine.
Christine Lagarde thinks the ECB needs to act “whatever you can do” return “inflation to 2% in the medium term,” the ECB president stressed at an event in Frankfurt this Wednesday.
According to Lagarde, if the bank does not go for a new increase in interest rates, the consequences for the economy will be more serious than the increase in the cost of credit. “Our goal is not to slow down growth, our main goal is to ensure price stability. This is what the ECB needs to achieve,” he added.
