The Euribor closes September at two-year highs and stands at 3.24%

BarcelonaThe Euribor, the benchmark indicator for the majority of variable-rate mortgages in the State, has closed the month of September at 3.247%, the highest level since July 2024, according to preliminary data published this Wednesday by the Bank of Spain.

It is the first time that the rate has closed a month above the 3% barrier, after the indicator reached 2.954% last August. In comparison with September of the previous year, the indicator has grown by more than one point, as it then stood at 2.172%.

The figures imply that a person who has taken out a variable-interest mortgage of 150,000 euros for 30 years and with a differential of 0.99% plus Euribor, will see their monthly installment increased by almost 98 euros, the equivalent of 1,174.5 euros per year.

Inflation and interest rates

In the year to date, the Euribor has already recorded six increases, the last three –July, August, and September– consecutive. The main reason behind this trend has to do with interest rates and inflation, which have been on the rise since the outbreak of the war between the United States and Iran.

With the start of the attacks in the Middle East and the subsequent blockade of the Strait of Hormuz, the price of oil skyrocketed. At this moment, the price of a barrel of Brent –the benchmark in Europe– remains near one hundred dollars, well above the less than 70 dollars prior to the start of hostilities.

Over time, rising fuel and logistics costs – transporting goods via routes alternative to Hormuz involves more time and more money – have ended up being passed on to the rest of products and services. The data published yesterday by the National Statistics Institute made this clear: the cost of living for families across the State has increased by 4.9% this September compared to last year, a rate of variation not seen since February 2023.

Faced with a scenario of rising prices and an economy that is resisting turbulence quite well, both in Spain as a whole and in the eurozone, the European Central Bank (ECB) has chosen to raise interest rates with the aim of cooling economic activity and, thus, containing inflation near the 2% target. It should be remembered that modifying interest rates is one of the main tools available to the ECB to control inflation. A rate hike implies that banks have to pay more for the money they lend each other and, consequently, they have to increase the cost of their products, including mortgages.

Future hikes

In its last meeting, held last September, the governing council of the euro zone's monetary authority, the European Central Bank (ECB), opted to raise interest rates to 2.5%, the highest figure since March of last year. Since the prospects for an agreement in the Middle East still seem distant and the economy is resisting –the ECB revised its latest growth forecasts for the eurozone upwards–, further future rate hikes cannot be ruled out.

In fact, the Frankfurt-based organization maintains that it still has room to continue tightening monetary policy in the event that the conflict in the Middle East continues to increase fuel prices. Although its president, Christine Lagarde, avoids anticipating events, this week she pointed out to the European Parliament that a "moderate" rate hike is the "appropriate" strategy.

However, the French leader also said that, for now, there were no signs that the current inflation episode "is consolidating" in all segments of the economy. "We do not react to energy prices. We react if we detect that the increase in these prices is being incorporated into inflation," she maintained.

The next ECB meeting, scheduled for October 29, will be a good time to evaluate what direction the organization will take between now and the end of the year regarding interest rates and, therefore, regarding the future evolution of the Euribor. Despite everything, it will also be necessary to take into account market expectations regarding developments in the Middle East, as the fear of the persistence of the conflict will also influence the expectations of companies and consumers regarding prices.