Euribor Rate 2020
The Euribor rate is one of the rates that the Portuguese most hear about when they venture into housing credit. Euribor is the acronym for European Interbank Offered Rate, it is the rate that individuals pay to banks when they are granted a loan. It is, therefore, the value of money that banks put on the market, serving as a reference for the various housing loans granted by European banks. The method of payment of this fee may be monthly fixed, variable or mixed. In the latter modality, as the name indicates, the rate is first fixed and then variable. See the Euribor rate daily here.
Photo by Kelly Sikkema – Unsplash
Now that we have introduced the most popular rate in the housing credits resolution, we should know how it is in this atypical year of 2020.
As expected, this rate continues to fall, as it has since 2015. This expectation extends to 2030, and will hardly be in a different scenario. This is excellent news for those who have applied for a Euribor-indexed housing loan. The forecasts are encouraging, as bank mortgages will continue to fall, or at least do not tend to increase.
It is believed that the policies of the European Central Bank have protected this very comfortable scenario for bank customers, just as the debts of European countries have also contributed to this forecast. This event is unexpected in a year in which there have been several changes in the world now. Given this, everything will remain the same and banks should continue to favour fixed rates for new housing loan contracts. The 6 or 12-month fixed rates are widely recommended by banks, as they bring more financial return to the institution than the variable or mixed interest rates.
Being such good news in such a troubled year, do you know if you would be entitled to a housing loan? This process is not fast and requires positive factors, such as financial solvency and, of course, the ability to pay. For the granting of the loan, the banks decree a minimum income, which varies from institution to institution. Another factor will be the effort rate, which cannot exceed 30% to 35% of your income after charges, such as other instalments and fixed monthly expenses. Ever since the last economic crisis, the banks grant a maximum value of 80% on the valuation of the house, i.e. if the house value is 200,000 euros, but if the valuation of the property results in 180,000 euros, the loan will be 80% over 180,000 euros. As a preview, the house purchase involves additional values such as a notary, registration, valuation, and taxes, which can represent between 10% and 12% of the house value. In this case, it is widely recommended to have 30% savings of the house value. Labour stability is one of the reference conditions for banks. Permanent contracts, seniority in the job or a government work position guarantee the aforementioned financial capacity. Find out more about home loans here.
If you are part of the group of people who needed a loan to get their house and indexed it to the Euribor rate, know that the forecast is positive until 2030. If you are in the group where you plan to apply for a loan, study your case and seek the best conditions from the various banking institutions.