Euribor has doubled in six months. More expensive loans coming
The three-month Euribor, the indicator to which the
cost of loans to customers is tied, has gone up to 1.17% from 0.6%
in the summer of 2010, on fears of ECB raising the key rate for
euros.
The loans in euros, which account for two thirds of the funding
granted by banks to companies and individuals, will become more
expensive this year, as the European Central Bank raises the key
rate to fend off inflationary pressures created by the skyrocketing
oil prices.
As far as a customer with a 30,000-euro mortgage loan repayable in
30 years is concerned, a one-percent interest rate increase
starting from 5.8% per annum (the market average at the moment
according to National Bank of Romania data) leads to an increase of
the monthly instalment of 20 euros to 226 euros.
Anticipation created by the recent comments from the bank's
officials about the key rate alone drove up Euribor, which reflects
the cost at which top banks lend euros to each other, to the
highest levels since the summer of 2009.
ECB's key rate has stayed the same at the all-time low of 1% per
annum since May 2009.
The oil price has almost doubled since last summer and along with
the increase in food prices drove eurozone inflation to 2.4% at the
moment, higher than the cap accepted by the ECB, 2%. Under the
circumstances, analysts expect 2011 to see two or even three euro
key rate increases.
Nicolae Dănilă, economics professor and former BCR chairman, says a
spiral is about to begin that will take interest rates much higher
than the current levels, which will cause some euro zone countries,
as well as some other countries in the EU, to request debt
restructuring. Those to suffer the most might be the companies and
individual customers to which banks might transfer some of the
increase in loan prices.