FEARS of mortgages and loans in Spain getting more expensive this autumn have proven unfounded – the Central European Bank (BCE) has opted to keep interest rates at 0%.
This historic low has been in place since March 2016, although recent talks seemed to hint that the eurozone interest rate, or Euribor, would go up from September now that the common currency area is out of recession.
But homeowners can breathe a sigh of relief – although investors who rely on asset interest for their income will have to wait a while longer before they can enjoy new riches.
In fact, deposit interest will carry on sitting at -0.40%, or negative figures, but this does not mean banks will deduct funds instead of paying interest and anyone who finds their entity does so should appeal.
Loan interest, including mortgages, will remain at 0.25%, and current home loans range from around 1.5% to 4% on top of the Euribor, making them cheaper than ever for those who pay them in euros.
The difference between Euribor highs of late 2007 and early 2008, when the rate skyrocketed to over 5.5% for the first time ever, are huge – on a typical 35-year, €100,000 mortgage, the last nine years or over 5% drop would have seen the homeowner save around €170 a month.
Meanwhile, the BCE will continue to buy bonds on existing debt at the current rate of €60 billion a month until the end of this year at least, or possibly longer if it considers it necessary to do so.
Spain's government says it hopes the BCE's official interest rates will 'remain at current levels for a prolonged period', or a length of time which 'vastly exceeds its net bond-buying forecast timescale'.
This timescale, although only fixed until January, may well continue indefinitely until inflation levels meet the Bank's objectives.
Year-on-year Eurozone inflation in August rose to 1.5%, compared with 1.3% in July – its highest climb sincce April, according to the EU's statistics agency Eurostat.
Read more at thinkSPAIN.com