We are sure that in the news, newspapers and even on Twitter , you have heard about the Euribor , and its ups and downs. And you will surely have questions about it, how… if we should worry about this indicator or if it affects us in some way…
Well, pay attention. Because we are going to explain everything you need to know about the Euribor .
What is Euribor?
By definition, the Euribor is the interest rate that a bank pays when another bank lends it money. As a curiosity, Euribor responds to the acronym EUR-I-BOR , that is, “Europe Interbank Offered Rate”, which could be translated as: “European interbank offer type”.
Returning to the definition, as we have mentioned, the Euribor is the percentage that a European bank pays, as a rate, when another lends it money. This percentage is reviewed and updated daily.
How is it calculated?
The person in charge of calculating and publishing it is the Reuters Agency . It calculates this using the loan offer prices reported by the top 50 European banks. For each given interest period (day, week, month, semester or year) the interest rates of the banking entities are reviewed and the average value is calculated, this being 3 decimal places. In Spain, the Euribor is publicly announced in the Official State Gazette (BOE) .
Curiosity: The highest Euribor in history was 5,393. It occurred in July 2008, in the midst of the economic crisis in Spain. And, the lowest, was -0.356 in August 2019
At this point in the article, you are surely curious and, therefore, we leave you this link where you can closely follow all the daily movements (ups, downs) of the Euribor (except Saturdays and Sundays) : https://www. euribordiario.es/
How does it affect my mortgage?
As you already know, when you take out a mortgage loan , you have a certain amount of time to return the capital with interest, in different monthly installments. This interest can be fixed or variable. When it is variable it is made up of two parts:
- Reference index: it is the part that varies and, in many cases, the Euribor is taken as a reference
- Differential: it is the fixed part that is added to the reference index
In short, if the Euribor rises, the fee to pay will also rise (it rises and falls gradually). That is why when you take out a variable rate mortgage , you pay a lower interest than a fixed rate mortgage. But, you will be assuming a greater risk. For this reason, it is necessary to take into account the movements of the Euribor, when signing your variable mortgage .
For this reason, it is necessary to take into account the movements of the Euribor , when signing your variable mortgage loan. Now that you have a good level of knowledge of the Euribor , visit our website and choose your future home!
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