Evolution of the Euribor from Nov-06 up to Oct-08
Who has not already heard to speak about the Euribor? unfortunately it is a term that has become known enough in the last months by the continuous increases that it has come suffering and that there have strangulated the home economics of more than one Spanish. We all know that ésto it is like that, because in order account we relate the euribor to the interest rate of our mortgages, but …: have you ever stopped to think what is this term exactly? how is it calculated? where from does it go out?
Officially, the Euribor is the acronym of “Europaean Interbank Offered Rate”, and it comes to refer to the interest rate to which they give themselves money between themselves the different European Financial institutions. The daily percentage of the Euribor salt of the average of the types to one year to those who have crossed operations on this day on the market of interbank deposits between the 64 more important entities belonging to the European Union.
In practice, this Euribor consists of two parts:
- One divides the form the official price of the money and the European Central Bank marks it according to his economic policy. If the inflation wants to control itself, the BCE will raise the types because this way the persons who have money will immobilize it in deposits that leave good profitability to him, while those who need to ask, contain the expenses because any credit or loan goes out more expensive. If on contrary the economy wants to be reactivated, the BCE lowers the interest rates, because this way it is less profitable to make the money inactive and nevertheless, it is more feasible to ask for loans to realize operations.
- Another part of the Euribor composes a valuation of risk that the different Financial institutions apply to themselves between themselves according to the margin of confidence existing between them. For example, at the beginning of October, the serious financial crisis that made doubt the solvency of many Financial institutions did that this confidence was weakening therefore the insurance increased, and did that the Euribor began to rise disproportionately. On contrary, and to resist this effect, the BCE soon had to lower the official type of the money, therefore there descended the first one of the components that shape the Euribor, what did that this one began to go down. The later descent of the insurance as a result of the biggest confidence that has generated the fact that the Governments go out to cover the solvency of the Financial institutions, has done that this second component, that of the valuation of confidence, pulls down in the last days of the Euribor.
The index of reference that is used usually in Spain for the operations of mortgage loan is Euribor Hipotecario BOE to 1 year (Euribor to 1 year) that every month turns out to be released in the BOE on the 20th and that it bears in mind the average of the change that he has suffered in the 30 previous days.
Image route: hipotecasyeuribor
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