What is the Euribor? First of all, we must make it clear what the Euribor is, it is the reference index most used in Spain to link mortgages. It has replaced others who were less effective in carrying out this real estate operation. In some cases, this was because benchmarks became outdated. In others, due to their early disappearance. It is essential to be clear that the Euribor will only affect you if you take out a variable rate mortgage . It is never linked to fixed rate mortgages, since they are governed by other parameters. The name Euribor derives from the acronym Euro Interbank Offered Rate . This is the interest rate at which a large number of banks grant short-term loans to each other. For this reason, it fluctuates up and down constantly. This constant oscillation of the reference index defines the variation of the monthly payment that you must pay for the mortgage, which is reviewed every six or twelve months, depending on what you have agreed with the bank.
The evolution of the Euribor and the SVB crisis
A week ago, a US bank, Silicon Valley Bank (SVB), went bankrupt due to mismanagement of rate increases by the Federal Reserve (the central bank of the United States). This aroused great fear that more bankruptcies would take place, this Lebanon Phone Number List concern also managed to establish itself in the European markets. It is true that these types of macroeconomic issues are somewhat far away for us citizens. However, in this case , the fear of bankruptcy of European banks also affects people who have a variable mortgage . The reason is very simple, its interest depends on a reference index called Euribor. The value of the Euribor started the month at its highest since and has fallen in recent days. Rise of the Euribor at the beginning of March and fall due to the collapse of SVB The reality is that the Euribor has already been rising for more than a year . To understand it better, in January of last year it was trading at historic lows (). However, its monthly value skyrocketed in the coming months. It exceeded in April (), then reached in September () and in December (). Its last record, in February , is the highest recorded since.
Why does this happen with the Euribor?
The value of the Euribor reflects the average interest that the main. European banks apply to the loans granted between them. This rate depends, mainly, on the interest that the European Central Bank (ECB) applies to them when it lends Ecuador Phone Number List them money: the higher it is, the higher the Euribor registration will be. Starting in the middle of last year, the European Central Bank increased its interest rate to combat inflation: from to . This caused the Euribor to close the month of February at , when the supervisor’s rate was . Then, March began on the rise, since the forecast was for the. ECB to raise its interest rate to , which is what happened. However, after the bankruptcy of Silicon Valley Bank , European entities began to think that other banks on the continent could suffer the same fate. So, to prevent this from happening, the ECB could choose to stop raising its rates . This is why, in recent days, they have applied a lower interest rate on their interbank loans , which generated a reduction in the Euribor price.