Euribor Hits Record High: Higher Mortgage Payments Ahead
The European Central Bank's (ECB) decision to raise interest rates has led to an increase in the Euribor, which is now at its highest level since the beginning of the year. The six-month Euribor stood at 2.820% on September 11, while the three-month Euribor climbed from 2.029% in January to 2.647% by September 11.
Nenad Gujanicic, a broker with Momentum Securities, notes that the Euribor has risen by about 70 basis points since February. Vladimir Vasic, director of BBS Capital Investment Group, explains that the interest rate on a loan consists of the Euribor plus the bank's fixed margin.
Vasic calculates that for every €100,000 of remaining long-term debt, a 0.25 percentage point rise in the Euribor means a monthly payment that's about €15 higher. For a typical €100,000 home loan, this rate hike could push the monthly payment up by about €50.
The effect is bigger for businesses, with companies paying about €3,100 more in interest this year due to the rise in the Euribor.