How do the new official mortgage market reference rates affect you?


Thinking of taking out or renegotiating a mortgage? If so, bear in mind that the new list of official interest rates that can be used as reference for calculating the interest rate on your monthly payments has been published this month. (Press releaseAbre en ventana nueva)

If you already have a mortgage referenced to any of the previous benchmark rates (e.g. 1-year EURIBOR, which is the one most widely used for household mortgages), this should not affect you. The previous references rates are maintained and the calculations agreed in your mortgage contract will continue to be applied.

The changes are included in a new Banco de España CircularAbre en ventana nueva and are summarised as follows:

  • Four new interest rates are included: 1-week, 1-month, 3-month and 6-month EURIBOR. For each of these, plus 1-year EURIBOR which remains an official interest rate, the monthly simple arithmetic mean of the daily values calculated by the European Money Markets Institute (EMMI), the index administrator, is taken.
  • MIBOR remains an official interest rate only for mortgages arranged before 1 January 2000.
  • Also included is the euro short-term rate (€STR), which is defined and determined by the European Central Bank (ECB).
  • In the case of the 5-year interest rate swap (IRS) rate, the data source has changed and the underlying index administrator has also changed (from ISDA to ICE Benchmark Administrator), but the calculation methodology remains the same.
  • The data source for the internal rate of return (IRR) of 2- to 6-year bonds on the secondary market for government debt has also changed. The IRR will now be determined using the data calculated by Sociedad de Bolsas, S.A., which belongs to the Bolsas y Mercados Españoles (BME) group.

Here you can see how the official interest rates changed up to December 2020.

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