Euribor up for second month

June 9th, 2010

Euribor 12 months, the interest rate predominantly used to calculate mortgage payments in Spain, rose 2% in May compared to the previous month, taking it up to 1.249%, the highest level it has been since last September. This is the first time since July 2008 that Euribor has risen for 2 consecutive months.

Despite rising for 2 months, Euribor is still not far above the record low of 1.215 it hit in March. It is still 24% lower than it was a year ago, and 77% lower than it was in July 2008. Because Euribor is still lower than it was a year ago, repayments on a typical annually resetting mortgage (120,000 Euros, 25 years, Euribor +0.8%) will fall to around €510/month, saving 24 Euros a month, or 288 Euros a year. If Euribor keeps rising, it won’t be long now before borrowers starting seeing their monthly payments increase, albeit modestly at first.

Euribor is an interbank lending rate based on interest rates set by the European Central Bank (ECB). Base rates are currently at 1% but the ECB is expected to put them up during the course of 2010. Even though base rates haven’t yet been touched, Euribor is starting to rise as banks get nervous about the state of the economy and lending to each other.

Story by Mark Stucklin

Related posts:

  1. Euribor Falls For 12th Consecutive Month
  2. Euribor At Lowest Level On Record
  3. Euribor Falls Again To New Low
  4. Euribor Rises, New Mortgages Up
  5. Euribor To New Record Low In November

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