Euribor hits new high, raising concerns for variable-rate mortgages

The Euribor ended August at levels close to 3%, rising for a sixth consecutive month and reaching levels not seen since September 2024.

The benchmark 12-month rate for variable-rate mortgages in the eurozone stood at 2.95%, compared with 2.855% in July, marking a new high in almost two years. “Since the outbreak of the Gulf war, Euribor has risen by nearly 0.7 percentage points, meaning that mortgages have become, on average, €900 more expensive per year. The average monthly instalment on a typical €150,000 loan over 25 years has increased by €65,” market sources told Naftemporiki.

“This increase is even worse news for households with variable-rate mortgages, whose interest rates are due to be adjusted shortly,” they added. They also pointed out that a year ago, Euribor stood at 2.114%, 0.8 percentage points below its current level. Six months ago, it was at 2.221%, 0.7 percentage points lower.

Uncertainty over the Gulf war

In any event, the August increase confirms the upward trend in Euribor since the beginning of the year.

The index fell to 2.221% in February, but subsequently climbed to 2.565% in March amid the macroeconomic uncertainty caused by the war in the Middle East. It has continued to rise ever since.

In addition, during August, the index breached the psychological 3% threshold on a daily basis.

Euribor is “pricing in” tighter monetary policy and higher interest rates from the European Central Bank (ECB).

“The market is moving faster than the central banks, which have yet to confirm whether there will be further rate hikes. This is already being reflected in monthly payments on variable-rate mortgages,” market sources said.

Attention now turns to the European Central Bank’s meeting on September 10.

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