The Euribor index remains below zero at the end of the year and lowers mortgages by 76 euros

The Euribor index remains below zero at the end of the year and lowers mortgages by 76 euros

  • It is the most used indicator to calculate mortgages in Spain.
  • The final data will be confirmed by the Bank of Spain next Monday.

The twelve-month Euribor is the most commonly used indicator to calculate mortgages. EUROPE PRESS

The 12-month Euribor will close the year at historic lows. It has 11 in negative and, predictably and in the absence of the official data offered on Monday by the Bank of Spain, will mark an average rate of -0.080% for December . It is the indicator with which the majority (90%) of mortgages in our country are calculated. And so, sunk and below zero, will save citizens with these loans about 76 euros per year.

However, despite these favorable figures to customers, banks will not have to return, at the moment, any money. Entities always apply a differential in mortgages that must be added to the Euribor , and the lowest that has been sold in general a credit of this type in our country is 0.17 percentage points, reports Efe.

Gone are the days when, at the height of the economic crisis, the Spanish suffered a Euribor of 5.393% : it was in July 2008. This indicator is the price at which banks lend money in the euro zone and directly hangs of the wand of the European Central Bank, which is the one that sets the rates.

Since last March, he keeps them at 0%; its president, Mario Draghi , wants to fight low inflation in this way, and it does not seem that he will change his mind soon, since in his opinion the measure “works”.


“Clauses zero” of the banks

The entities are not comfortable. First, because they lose money. That is why they have made imaginative decisions – aside from raising the aforementioned differential – such as the application of the so-called “zero clauses” in variable interest mortgages. What is this? As easy as setting a fixed minimum of 0% for the Euribor. With this the banks make sure that, no matter how much the indicator falls, they will charge for the loan granted.

” It is normal that banks seek to hedge against eventualities that may damage their bottom line, ” he told 20minutes Victoria Torre, head of Content Development, Products and Services Self Bank, “but most importantly transparency the time to hire is total for the customers, “he adds.

It is normal for banks to try to cover themselves against eventualities that may damage their income statement. Secondly, we must remember that the Euribor is in question. “Uncertainty about the integrity of these indices is a source of vulnerability and systemic risk, and can undermine market confidence, seriously harm consumers and investors and distort the real economy,” he wrote this week in an article for the BE Responsible for Resolution and Financial Stability of the National Securities Market Commission (CNMV), María José Gómez Yubero.

Earlier this month, Brussels placed a fine of 485 million euros on three international banks (Credit, HSBC and JP Morgan) for manipulating the index; Barclays, Deutsche Bank, Royal Bank of Scotland and Société Générale had to release another 820 million after recognizing, yes, their fault.

System reform

At the moment, a remodeling of the system that allows us to calculate the Euribor is underway. The aim of the European Money Markets Institute (EMMI), in charge of doing so, is for the calculation to be made from real operations and not from estimates provided by banks, as it has been up to now. It is expected for 2017, although Torre points out that it could be delayed because the entities “are not responding” as expected.

The number of signed mortgages grew 16.8% in October The expert believes that the new Euribor ” could be a much more reliable index of the market situation” and ensures that there is some “hope” in eliminating “some of the distortions “that are given with the indicator in force.

The current situation envisages a possible increase in variable-rate mortgages. Some have been ahead of the events and in October (latest data from the INE) 28.6% of mortgages signed were at fixed interest, 18.9 points more than in the same month of 2015 . The number of signed mortgages grew 16.8%. Something moves, although there is still a way to go.

The banks not only cover their backs now: many mortgaged are still dragging the effects of the floor clauses . On December 21 the European Justice gave them the reason and they will charge the overpaid. Little by little.

Three questions to …

Victoria Torre , responsible for Development of Contents, Products and Services of Self Bank.

How long will the Euribor continue in negative?
I could continue like this if we consider the reasons. First, interest rates are at 0%, and this in the short term will not change. Neither the negative levels (-0.4%) of the deposit facility of the ECB to the banks. And the ECB’s purchasing programs have been a pressure.

Mortgage at fixed or variable rate?
The situation is exceptional, in the medium term it has to reverse. The historical average of the Euribor is around 2%, that should be our reference. The spreads have already risen, so when the rebound begins can be noted in the rise in variable-rate mortgages.

Could banks get to return money?
They could in some cases be signed under very advantageous conditions, but in most cases the spreads leave a sufficient cushion for the entities.

Science to carry

# # # By Juan Margalef Roig, Enrique Outerelo Domínguez and Salvador Miret Artés *

Can you sell what you do not have? In financial economics; yes. Selling short (or short) means selling securities that are not owned.

An investor can borrow, in exchange for the payment of a ‘rent’ (or premium), shares to another investor … and obtain significant benefits from this operation .

Suppose that our investor becomes ‘bearish’ with respect to the shares of a company; that is, it has the sensation or intuition that the action of a certain company will fall within a reasonable period of time. Through its broker, you can borrow 20,000 shares of that company from another investor to sell them immediately afterwards.

Author: Alberto Carrasco-Casado

Let us also suppose that at the time of this operation the stock is quoted at 13 euros and that, a few weeks later, according to the expectations of our investor, the price drops to 9 euros. At that time, you can undo the position; that is, buy 20,000 shares and return them to whoever had left them on loan.

If we consider that at that time the company has distributed a dividend of 1 euro per share, which the owner of the securities must receive, we can calculate the profit of the operation. Leaving aside the management expenses (agent commissions and the ‘rent’ of the shares) the profit is 20,000 x 13 – 20,000 x 9 – 20,000 x 1 = 60,000 euros.

This practice, common in the financial world, is regulated in Spain by the National Securities Market Commission (CNMV). The organization requires investors sufficient guarantees to cover all steps of the operation (especially, provided by other investors), which are returned with their interests at the end of the process.

If the stock, instead of falling, increases in price, the broker, following the regulations of the CNMV, will ask for more guarantees to the investor or will undo the position immediately. If the stock is unpaid at 15 euros, the investor’s losses will be: 20,000 x 13 – 20,000 x 15 – 20,000 x 1 = – 60,000 euros (the negative sign means losses).

The ‘bearish’ scenario could have been imagined or intuited, for example, by the actions of Spanish banks due to the Greek crisis of last July. So it was.


The same idea underlies the speculation known as ‘attack on a coin’ which is supposed to be a weak currency. Without wanting to give names of people or groups of people who have done it, we will briefly describe this scenario. The speculator, without departing from the regulations of country M or international regulations, asks for a loan from the currency of country M. Immediately after receiving the loan, he changes it to dollars or any other ‘strong’ currency that is chosen to operate . This last operation takes place within the financial system of country M, therefore the currency reserve of M decreases. This operation is repeated 4, 5 or 6 times in a short time, decreasing more and more the currency reserve of country M and, sometimes, in a generalized environment of rumors and signs of devaluation. When the devaluation expected by the speculator arrives, he returns the loans in the M currency, which, being devalued, leaves him an important benefit.

Let’s see this procedure with an example. The speculator will receive five successive loans of 200 million coins of M; and it will change each one of them with the following type of change: the first, 100 coins of M for 1 dollar; the second, 105 by 1; the third, 110 by 1; the fourth, 120 by 1; and the fifth, 125 for 1. Without counting the interest and the expenses of currency exchange, the speculator owes 1,000 million coins of M and will have in his possession 8,989,610.39 dollars. Suppose that after the official devaluation in M, the change is 150 M coins for 1 dollar. Then our individual will change $ 6,666,666.67 to obtain the 1,000 million M currency with which to repay their loans, and will retain a profit of $ 2,322,943.72.


* Juan Margalef Roig and Salvador Miret Artés are researchers from the CSIC at the Institute of Fundamental Physics. Enrique Outerelo Domínguez is a professor at the Complutense University of Madrid. The three are authors of the four volumes of the work Probability and Economics (Sanz and Torres).


About Mar Gulis:

#Bajo the collective name of Mar Gulis (in tribute to the great researcher and disseminator #