Spanish mortgages still low: Euribor to stay 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.

But it is still far short of the BCE's price stability criteria, which needs inflation to be around 2%.

Underlying Eurozone inflation – net of energy prices and the cost of fresh food produce, due to the volatile nature of both markets – remained stable in August at 1.3%.

In the meantime, the Eurozone economy registered growth of 2.3% in the second quarter of 2017 based upon Q2 of 2016, and a healthy hike on the 2% seen in the first quarter of 2017, based upon GDP figures released yesterday (Thursday) by Eurostat.

Between April and June, the GDP for the 19-country common currency bloc, which includes Spain, rose by 0.6% on that of Q1 of 2017 – higher than the 0.5% rise seen in the first three months of the year.

Last month, the BCE confirmed that the Eurozone is finally out of recession, exactly a decade after it started midway through 2007.

Spain is leading Eurozone growth, and is officially the fastest-expanding economy in the single currency area.