Citizens with long-term loans, primarily hosing loans indexed in euros with variable interest rates, will pay higher interest rates in the future, because Euribor, an integral part of the interest rate calculated for them, has increased. Economists project that Euribor will continue growing by the end of this year, and maybe even next one, depending on the monetary and fiscal policy in Europe.
After nearly seven years, in June, the six-month Euribor went from negative values into positive ones and is currently at around 1%. Also, in July, the three-month Euribor went into a positive value. Of the five biggest banks in Serbia, two variable interests are tied to the six-month Euribor, whereas the other three are tied to the three-month one.
Due to this, loan repayment installments might be considerably higher for citizens at the end of the year, as pointed out by the president of the Association for Protection of Bank Clients “Efektiva”, Dejan Gavrilovic:
– An example is a loan of EUR 50,000 for 20 years, which is 240 months. In this example, we consider the margin to be 3.5%. In that case, the installment at the beginning of the year was EUR 276, when Euribor was at –0.55%. Now, at a value of 1.077%, the installment has grown to EUR 316, an increase by EUR 40 in about eight months. A loan of EUR 80,000 for 25 years, with 300 installments, the installment was initially EUR 377, and now it’s EUR 445, an increase by EUR 68. Considering that Euribor continues growing, if it went up to 2% by the end of the year, for a loan of EUR 50,000, the installment would be increased to EUR 344.
He warns that the biggest cost could be for those whose loans were approved this year or those who are now borrowing at new interest rates.
– If Euribor starts growing drastically, the only thing banks could do is to waive a part of their margin – he said.
He explains that loan installments are formed periodically. The six-month Euribor is harmonized twice a year, so, in the first half of the year, the installment will be calculated according to the Euribor value from December 31, and in the next six months, according to the value from June 30. For the three-month Euribor, the installment is harmonized on March 31, June 30, September 30 and December 31.
– It has been announced that another increase of the key policy rate will take place in September and it is precisely the growth of Euribor that is a reaction to that. If there are no new increases by the end of the year, it is to be expected for Euribor to stabilize between 1.5 and 2% following the session of the European Central Bank.
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