The 12 months Euribor rate used to calculate most mortgage repayments in Spain came in at -0.013 in March Protected content .
This is obviously terrible news for savers but in the short terms existing borrowers with an annually resetting mortgage product could see their monthly repayments decline by C€12pcm (based on €120,000 over 20 years).
Long term, no one (including us at EU Property Solutions) knows where this is going or how things are going to pan out. Financial experts certainly didn’t predict the Euribor rate to move negative so quickly. As it has turned negative Spanish Banks have gone into a frenzy to work out simply what to do! Technically Banks could start to pay their customers who are due a mortgage repayment review. Crazy!
The President of the Spanish Banking association has been quoted saying the above is “insane, unsustainable and unreasonable” and we understand the association is currently seeking legal advice on how to respond to these rates. It would seem though that Banks have commenced measures to protect themselves.
As stated above EU Property Solutions (and no one else it seems) know how the situation is going to pan out. Ambrose Evans Pritchard, International Business Editor at The Daily Telegraph, outlined the scenario as “grotesque…devastating for Banks….a calamitous misadventure.”
We understand this brings about yet more uncertainty for Spanish property owners. It is incredibly to think that 8 years on from the Global Financial Crisis we are still obviously seeing repercussions.