Do you know what the Euribor is and how it affects you?
Whether you are an entrepreneur, a business owner or simply a professional exercising your career, this is one of the most important terms to be aware of. This affects us more than we think when it comes to banking and loans.
Many lenders take this value as a reference when setting interest. If you don't know what Euribor is, what it's for and how it affects you, don't worry. Here we explain it to you.
What does Euribor mean?
Euribor is the acronym for Europe Interbank Offered Rate (or Interbank Offered Rate in Europe is Spanish) it is an interest rate applied to banks in Europe selected by the European Banking Federation. This was first published on December 30, 1998.
When a client applies for a loan, the bank must look to different sources for the money to grant this loan. This is when the Euribor comes into play, since if the money is borrowed from another bank, this other bank must establish an interest. This interest is the Euribor .
So, when you are applying for a loan, you will usually end up paying the borrowed amount, the Euribor and the interest set by your bank (which is expected to also make a profit).
The Euribor is published daily and is one of the main references used by banks in the us dollar area when setting interest on the loans they make. There is more than one Euribor , all types varying mostly depending on the period of time that a loan is made.
What factors affect the Euribor?
Essentially, the Euribor is affected by supply and demand among multiple European banks. But it can also be affected by inflation and economic growth. Large banks are surveyed daily in which they must state their interest rates. This rate is used to calculate a general interest, the Euribor , information that must be presented before 11:00 am.
How is the Euribor index calculated?
Taking into account all the interest rates collected from the different banks and lenders in the us dollar zone, the highest and lowest 15% are taken, eliminated, the remainder are averaged, and the result is rounded to 3 decimals.
Where to see the value of the Euribor?
After having calculated its value, it is published on many information platforms, such as Reuters and Bloomberg and many more. Finding the benchmark for the day should be no more difficult than doing a quick internet search.
Which banks affect the Euribor?
In United States there are banks that are taken into account to calculate the Euribor index . Among them are:
- Santander Bank.
- Banco Bilbao Vizcaya Argentaria.
What is Euribor for?
Euribor is used mainly as an interest reference for mortgage loans. Every time you apply for a personal loan, a mortgage loan or make a bank deposit, keep in mind that the Euribor affects the additional fees you are paying.
It is important because it affects the interests awarded to many financial products and services, mainly loans of all kinds.
We recommend that you always be attentive to variations and fluctuations in its value so that you can order your finances with caution. When the Euribor rises, prepare for a blow to your pocket, because your interests will also do so (if your loan is of variable interest). On the other hand, when the Euribor goes down, the interest on your mortgage loan will be cheaper.
You could also take this opportunity to make early repayments on your loans if your lender allows it.
What are you waiting for? Research its value and prepay your personal loan if possible.