Average home loan payment could grow 45 percent if Euribor hits 3 percent
Forecasts suggest Euribor will hit 3 percent next year, which would see the monthly payment of the average home loan in Estonia grow by 45 percent compared to when the loan was taken, Catlin Vatsel, head of private financing at LHV Pank, writes in Maaleht.
Data from Statistics Estonia suggests the consumer price index grew by 21.3 percent in November year-over-year. To slow down soaring inflation, the European Central Bank has gone down the path of hiking base interest rates.
Vatsel writes that the Euribor rate, which is added to banks' home loan interest, was highest in 2008 when it reached 5.4 percent and is currently at 2.4 percent. The markets anticipate Euribor to hit 3 percent in the near future.
This would see the monthly payment of an average home loan with an interest rate of 1.9 percent and a repayment period of 30 years grow by 45 percent compared to the original loan conditions during the period of negative Euribor, which in most cases meant it was not applied, according to LHV's calculations.
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Editor: Marcus Turovski