Euribor rates have already risen by more than a percentage point – and this is already costing tens or hundreds of euros per month. See how much

Month after month, Euribor rates are rising and home loan maturities are becoming more expensive. They tend to increase further. Grain by grain, the chicken empties the harvest.

Interest rates continue to rise month after month, which makes Portuguese home loan monthly payments more expensive. The effects come little by little, as the benefits are reviewed. In the months to come, you will feel more and more.

During the first 15 days of August, the average 6-month Euribor – the most used in mortgage loans in Portugal – was 0.714%. In July, the average was 0.466% and in June, 0.162%.

Gone are the days of negative rates – but it wasn’t until June 6 (just over two months ago) that the 6-month Euribor turned positive, ending a long run of around six years in below zero.

These are only tenths, but the effects are felt in euros. By tens. Or hundreds. A month.

Euribor has risen by more than a percentage point this year

Let’s continue with the rate most used as an index in Portugal. Since the start of the year, the 6-month Euribor has fallen from -0.546% (as of December 31) to 0.745% (today). The variant is plus 1,291 percentage points in 2022.

In the case of the 3-month Euribor, the variation is 0.911 percentage points. And the 12-month Euribor is up 1,659 percentage points.

Euribor rates vary every (working) day because they are market rates: in simple terms, these are the rates at which commercial banks lend money to each other. In variable rate mortgages (which are the majority in Portugal), banks generally charge Euribor + spread. The spread is fixed throughout the contract, the Euribor fluctuates.

The trend is that these hikes won’t stop there, as central banks around the world – including the European Central Bank – are raising interest rates as an inflation-fighting measure. In a simplified way: the more money is expensive, the less people ask for credit, so the less they consume, thus lowering demand. With less demand, less pressure from price increases.

How much do fare hikes cost (you)

Let’s continue with the 6-month Euribor: if the rate has already increased by 1.291 percentage points, this means that debt capital costs 1.291% more than at the start of the year. For a debt of 100,000 euros, for example, you will have to pay an additional 1291 euros per year in interest, which, divided by 12, gives an increase in the monthly payment of around 108 euros per month. compared to what I paid before.

This value serves as a reference, because everything depends on the specific conditions of each contract. If you have a mortgage and want to be better guided, consult your bank (or, for example, the count of the last installment) and see what the principal outstanding is at the moment. Then apply the interest rate increase to that outstanding principal and divide by 12, this will give you an idea of ​​how much you may be overpaying.

For reference, see in the following table how much the payouts are already increasing, compared to the start of the year.

This table is for reference, to give you an idea of ​​what you will pay After per month that you would pay at the beginning of the year.

Don’t forget that the value of bank maturities is reviewed every three, six or 12 months, depending on whether the Euribor on which your credit is indexed is 3, 6 or 12 months respectively.

If, for example, you have a mortgage indexed on the 6-month Euribor and the last revision of your maturity dates from April, you will not feel the effects of the rate hike until the next revision in October.

In the case of fixed rate contracts, minority in Portugal, there is no rate variation during the period provided for in the pricing agreement (which may even be the entire duration of the agreement).

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