Abanca launches a mortgage that limits the rise in the Euribor for the first six years | My money

Amid the dizzying rise of the index euriborwhich is making variable-rate mortgages substantially (and historically) more expensive, by more than 2,300 euros on average, and given the preference now of banks to take out variable-rate mortgages, Abanca has taken the step of launching the first mortgage that tops the euribor.

The entity has baptized the product as the Mari Carmen Plus mortgage, which protects the client against rising interest rates during the first six years of the loan. Specifically, as reported by the entity, the new Abanca mortgage loan offers a fixed interest rate for the first 12 months and a variable rate for the rest of the term. The discounted rate is 2.25% the first year and after the Euribor plus a spread of 1%. But, the novelty lies in the fact that, from the second year and up to the sixth, the increase in the Euribor is limited to a maximum percentage. In the introductory offer, this limit has been set at 3,5%.

Currently, the Euribor is trading at 2.5% daily and the provisional average for October is 2.5%, after closing September at 2.233%, the highest level since 2011 after registering the fastest rise in its history (up 272 basis points compared to last year). Thanks to this differentiating characteristic of the Mari Carmen Plus mortgage, if the Euribor continues to rise and exceeds the established limit, the maximum percentage of 3.5% will be taken to calculate the interest rate on the loan when it is due for review, at which the corresponding differential will be added.

However, if the reference rate is below the fixed limit, the Euribor index in force at that time (plus the corresponding differential) will be applied to calculate the interest rate. Thus, from the moment the client contracts his mortgage, he will know in advance the maximum amount of the installment that he could pay during the first six years.

“This is an alternative and innovative solution, with which we want to respond to the needs of our customers, who today more than ever seek stability and tranquility in the management of their mortgages in the current environment of continuous rise in reference rates” , explains Saray Cendón, Director of Business Development at Abanca.

Since December 2021, when the Euribor hit its second historical low (-0.502%), the index has not stopped growing exponentially as a result of the successive rises in interest rates that central banks have undertaken, above all, the European Central Bank (ECB), to fight inflation. The first rise by the European body was in July this year, up to 0.5%; and the second, in September, up to 1.25%. The president of the ECB, Christine Lagarde, assured this week that there will be new increases in interest rates in the next meetings of the entity’s council to deal with inflation. Because of this monetary policy, experts say, the Euribor will continue to grow. However, the index is expected to slow its rise in the coming months.

The latest forecasts from the Bankinter analysis department suggest that it will be around 2.8% in 2022 and 3% in 2023.