The 12-month Euriborreference for variable rate mortgages in Spain, rose this Thursday up to 2.47%10 basic points (bp) more than on Wednesday (2.36%), which puts an end to the losing streak of six consecutive sessions that I had drawn since last week.
The provisional average for October stands at 2.43% after the first days of the month. It trades slightly above the official close that marked in September (2.23%) with which the variable rate mortgage contracts will be reviewed under the influence of this index and 12 months.
The Euribor six monthswhich is also used to set the interest on housing loans, rose this Thursday to 1,83%0.107 points more than Wednesday after falling in three consecutive sessions.
Despite the fact that the price of the Euribor has lost energy in recent days, the background upward trend continues to the sound of the expectations of interest rate hikes deployed by the European Central Bank (ECB).
The monetary authority raised the official rate to 1.25% on September 8 and is preparing to undertake an increase of up to 0.75 points at the end of this month, which would place the official price of money at 2% in a few weeks.
How is the Euribor calculated?
The evolution of the Euribor rates is linked to the monetary policy set by the ECB but also to the daily decisions in the granting of credit of the main European banks and reflect the cost of credit between banks. There are five main terms: the Euribor at 1 week, 1 month, 3 months, 6 months and 12 months.
The calculation method It officially changed two years ago after the manipulation scandal detected by the financial authorities and supervisors, especially in the United Kingdom with the ‘sister’ Libor index.
Formerly it was the Reuters agency that was in charge of collecting the data bank by bank, from a panel of 54 credit institutions, to prepare a daily average price. But it was a survey among the operators that did not have to answer with reality.
For this reason, the European supervisors, led by the ECB, sponsored a change in the way it is calculated. Responsibility was assumed by European Monetary Markets Institute (EMMI, for its acronym in English), which in order to ensure the robustness and representativeness of the Euribor, and to comply with European regulations on financial reference indices, uses a hybrid methodology with 3 levels of real data collection.
Firstunsecured money market transactions with a minimum of 10 million euros. Secondmoney market maturities. Third, other types of comparable operations. In all cases, the participating banks must provide documentation that attests to this information and it is not enough for it to be verbal.
The EMMY leans on a panel 18 banks to calculate the evolution of interest on wholesale financing and calculate the Euribor. On the part of the financial system in Spain participate Santander, BBVA, Caixabank and Cecabank. France has five participants: BNP Paribas, Societe Generale, Natixis, Credit Agricole and the European subsidiary of HSBC. Germany contributes only two entities (Deutsche Bank and DZ Bank), like Italy (Intesa and Unicredit).