The Euribor has clearly abandoned its moderate movements in the past two months after having left behind in April the negative terrain where it had been for the last six decades. Next June, the main interbank indicator will close at the 1% level. The average monthly rate will be 0.8%. This will mark its highest rate since August 2012.
This record is a significant increase compared with May when the indicator was at 0.28%. It also represents a stronger rise than June 2021 when it reached -0.484%. Since the index was last at -0.5% at the end, the reconversion has been rapid. He turned positive in just four months. It has now reached its current level in six weeks.
This will result in variable mortgage payments that must be reviewed using this data becoming more expensive. For an average mortgage of 150,000 euro, with interest at Euribor plus 1.1%, the annual loan installments will rise by more than 1,400 Euros.
With the market discounting an increase in interest rates of 25 basis point in July, the upward trend in the Euribor has been accelerated. Christine Lagarde (CEB president) reiterated Tuesday that a higher rise in interest rates could be possible in September to stabilize “undesirably high” inflation.
However, these estimates aren’t very flattering. According to Bankinter’s latest strategy report for the third quarter, the 12-month Euribor will be at 1.90% by 2022 and rise to 2.20% by 2023.
Christine Lagarde (ECB president) assured Tuesday that the institution will go “as far” as necessary to ensure that inflation stays at 2% over the medium-term. She believes that the tool to fight market fragmentation will allow interest rate increases as needed.
