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Euribor breaks the upward trend

The Euribor index continues to fall in the last days of March. After the month began to threaten to reach the 4% level, the collapse of Silicon Valley Bank and Credit Suisse triggered financial turbulence causing the most widely used mortgage index in Spain to fall from 3.953% to 3.322% after only 8 days on record. In total, a sharp plunge of 656 points left Euribor well below the ECB interest rate at 3.5%. 

Experts believe that we will probably end the month with an average of close to 3.6% - a bit higher than February (3.534%) due to the strong uptrend we have had during the month. And we will probably have to wait until April before we can see it clearly below the current 3.3%. 

What seems clear, however, is that March will mark the highest level since 2008 and the trend towards a more sideways behavior will begin. Unfortunately, mortgagors who have to revise these months will continue to experience a sharp increase in their monthly payments, especially those who do so annually because in March 2022 Euribor was still negative.

The markets completely ignored the recent ECB meeting where they decided to raise interest rates by 50 bps and are looking closely at the possibility that the Fed will soon announce the end of an era of monetary tightening. 

Central banks have had to change their obsession with inflation to perform the difficult task of controlling prices without collateral damage to banks and the economy. The failure of two banks is certainly a wake-up call about the dangers of raising interest rates too fast.