Euribor hits 4.046%: Talk of 5% rises

Euribor breaks 4% mark, causing variable mortgage payments to surge

The Euribor is no longer just a nuisance; it is a problem. The index closed at 4.046%, marking a significant 0.65% increase, while the June average settled at 3.938%. For those with variable-rate mortgages, this figure is not abstract macroeconomics: it is money leaving their accounts every month. What comes next is what worries people.

The 5% threshold no longer sounds exaggerated

Every tenth of a point on the index translates into euros. Some are no longer talking about tenths, but about jumping to 5%. With inflation still lingering, arguments suggest the index has room to rise further: "Even with everything heavily suppressed by current rates, it shouldn't be below 4.5%," one forum user states, anticipating further increases to align the index with inflation.

This is not an isolated prediction. Another message points directly to 5% being "just around the corner" and recommends bracing for impact. The era of cheap interest rates is over, changing the rules for everyone.

Fixed vs. variable rate: The decision now under scrutiny

Years ago, the conversation in any bank branch was always the same: choosing a fixed rate and paying €60 more per month was considered foolish. Variable rates were cheaper, and according to the narrative then, the future would always be better. That future has arrived, and it is called 4.046%.

Those who signed up for a fixed rate can breathe easier. Those who chose variable cannot. For another forum user, opting for variable is like "playing Russian roulette," because future payment conditions are unknown, making long-term household budgeting impossible. A fixed rate might cost slightly more, but it buys certainty. Conversely, those who took advantage of years of minimal rates and used those savings to pay down debt or invest have less to blame themselves for. The issue isn't having chosen variable, but having done so without a financial cushion.

Four million mortgages tracking the index

The scale is significant. The figure circulating these days is 4 million active variable-rate mortgages in Spain, a number that surprised the forum user who looked it up. Added to these are mortgages signed recently with mixed formulas: two years at a fixed rate, after which the index takes control.

The numbers from a single transaction help understand the scale. For a €300,000 apartment over 25 years, total interest was around €20,000 a year ago. Now, we are talking about €277,000, according to calculations circulating in the thread. The complete breakdown of that operation, line by line, is disorienting. No one signs such a deal knowing they will pay that amount.

€400 more per month: When the salary doesn't stretch far enough

The impact is not measured in percentages, but in the shopping basket. Utilities, food, clothing, private school fees for two children, car and home insurance, health insurance, vacations, property tax (IBI), community fees... And above all that, €400 more in mortgage payments each month. The result has a name: ruin.

This is where the drama ceases to be an opinion column. Many benefited for years from extremely low payments and now cannot cope with the increase. It doesn't matter what they paid before: if the money isn't there, it isn't there. The ant from 2008, who spent without looking ahead because interest didn't exist, reappears on the scene.

Public auctions: Where some look for bargains

At the other end of the board are those waiting for the market to break. The thesis is the same as ever: most only sell off assets when they are drowning, and that is a good time to buy. The focus is on official state auctions: according to one forum user, those visiting official websites do not find rigging, although practices are detected such as auctioneers paying others not to bid, or people trying to move the auction location to reduce visibility.

Proof that striking prices appear there is provided by a forum user who found an apartment on Bailén Street for just over €550,000. As noted in the thread, the Tax Agency does not publish who acquires them or at what price, making it difficult to measure the floor of the bargain. Those who already own four homes bought during times of others' distress are waiting for the fifth.

Unemployment: The final blow that hasn't landed yet

Then there is the scenario no one wants to name. The cold takes time to seep into the bones, and the same happens in the market: prices remain high, and mortgages have become impossible to obtain. But the final blow has a specific name. When unemployment runs wild, ruin and misery quickly trinc. Until then, the dominant phase is denial.

Whether the Euribor stays around 4% or jumps to 5% is, today, a gamble. The only certainty is that the June average, 3.938%, will no longer be a comfortable floor for anyone keeping up with their payments.