Loan installments jumped from 276 to 400 euros thanks to high EURIBOR

Due to the current global circumstances, Euribor (the price at which European banks lend money to each other) has been constantly growing over the last year and longer. Today, it stands at nearly 3.7 percent, and not so long ago it was in negative.

Ahead of the European Central Bank (ECB) meeting, and just after the US central bank, the FED, decided to halt interest rate hikes yesterday, global economists and analysts say Europe’s highest monetary authority will continue to hike, so there is a possibility that the benchmark interest rate will be the highest since the last global economic crisis of 2008.

The FED kept the interest rate in the range of 5 to 5.25 percent, but the projections of its Board surprised everyone which caused an immediate drop of stock market indices. The FED suggests that, by the end of the year, there could be two increases in interest rates of 25 basis points each, but the head of the FED, Jerome Powell, could not confirm that the first increase will happen in July.

In 2016, the Euribor rate, which is, among other factors, used to determine mortgage repayments, was negative. In 2022, it stood at -0.54%, then a slight growth started from April of the same year. In July, it was already in plus, in September it exceeded one percent, and now it is close to 4 percent, the highest since 2009.

For example, if someone took a loan of 50,000 euros, with a 20-year-payment period at an interest rate of 3.5 percent + six-month Euribor, early last year the monthly mortgage instalment would have been 276 euros. Once Euribor exceeded two percent, the instalment jumped to 344 euros. When it reached three percent, the instalment jumped to 373 euros, and if it reaches five percent, which was the Euribor rate in late 2008, the instalment would amount to 434 euros.

Exactly three months ago, Euribor was 2.96 percent. It grew after that and currently, i.e. as of June 13th, it stands at 3.53 percent.

(Blic, 15.06.2023)

https://www.blic.rs/biznis/privreda-i-finansije/evo-kako-nam-je-rata-kredita-skocila-sa-276-evra-na-skoro-400-centralne-banke-nemaju/4qxj075

This post is also available in: Italiano

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