Spanish mortgages affected by Euribor rise

The Euribor rises to 4.1% in February

Spanish households with an average mortgage of around 140,275 euros over 25 years will have to pay around 90 euros more at the end of the month as a consequence of the 17th consecutive rise in the Euribor. Calculated over a year this is over 1000 euros more per household. At almost 4.1% it is at its highest since August 2001.

In 2006, 1,864,000 mortgages were granted, a figure 6.3% more than last year. The average mortgage is now more than 140,000 euros which is 12.6% more than 2005.
The Euríbor is the most widely used interest index used by the banks when granting mortgages, most of which are taken out at a variable interest rate. Yesterday’s rise in the Euribor will be confirmed by the Bank of Spain in the middle of March.

For those households that can’t meet the new payments there is the possibility of renegotiating their mortgages and increasing the years for it to be repaid. For example if it is a 25 year mortgage this could be extended to 30 or 35 years which would make the amount due to be paid at the end of every month more manageable.

However, experts have confirmed that the Euribor will continue to rise over the next few months.

At the beginning of February the president of the Central European Bank, Jean-Claude Trichet, hinted that in March interest rates would rise. Financial analysts have predicted that Trichet will raise interest rates by a quarter of a percent over 3.5% and by summer rates could be as high as 4%.

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