After EURIBOR increased for 20 consecutive months, interest rates fell to 4.07% in August, a figure that Tecnotramit warns ‘could stay like this’, since banks and European policies, which are used as counterweight, are not able to stabilise inflation.
According to Carles Solé, Tecnotramit’s Mortgage Loan Coordinator, the economy’s cooling down to control inflation has a cost and is affecting several European countries’ Gross Domestic Product (GDP), like in Germany’s case which is so affected it may be on the brink of ‘a frightening and very possible recession on the horizon.’
‘EURIBOR’s rise is slowing down. This effect is seasonal during the summer months, particularly August, and is not so noticeable in economies with a strong tourism sector, but those economies that do experience cooling down suffer from interest rates varying very slightly, including EURIBOR,’ as pointed out by Solé.
Central banks’ main priority is to control inflation, which they have not yet achieved. As we informed media: ‘Some countries have noticed these effects, but other strong economies around us approach 6%, quite a distance from the European Central Bank’s (ECB) 2%.’
Inflation on an upward trend
This translates into a euro area in which many countries maintain an upward trend over 5% even though price rises are slowing down slightly. As a reply to this situation, ECB’s President, Christine Lagarde, warned new interest rate rises could come into effect. Therefore, EURIBOR’s evolution will have a direct effect on the granting of loans and adjustments to variable rate mortgage payments.
‘We come from a spectacular year concerning property conveyance after the pandemic, since it caused people to save and a willingness to make changes to their property. Today’s interest rates restrain this idea, even though fixed rate mortgages are still very attractive in comparison to those 10 or 15 years ago,’ Solé admits.