The clients with loans in euros whose interest is indexed to EURIBOR are starting to see significant declines of their monthly instalments, as interests on the interbank markets are going down.
The EURIBOR index, which reflects the cost at which the major banks on the European market lend euros to each other and is used as a price reference, has gone down to 1.4% a year for three-month maturities, compared with 2.85% a year in January. Last October, EURIBOR had reached as high as almost 4.5% a year. As a rule, banks charge four to six percent on top of the EURIBOR level.
“Where the corporate sector is concerned, it is a matter of how the interest is renegotiated. As for retail, those with loans with interests tied to EURIBOR will benefit from this cut of the indicator. In case of new loans, it depends on the risk cost. If it goes up, we will probably see costs stagnate for new loans,” says Lucian Anghel, BCR’s chief economist.
For a 30,000-euro loan repayable in 25 years, with an interest tied to EURIBOR for three months plus a five percent margin, the monthly rate currently stands at some 200 euros, compared with almost 230 euros at the beginning of the year. Calculated at the EURIBOR level last October, the rate stood at 270-280 euros.
“The monthly instalment has gone down from 289 euros, at the beginning of the year to 264 euros now,” says a client who is repaying a ten-year 20,000-euro loan.
The decline of the instalments in euros caused by the interest rate cut is now even offsetting the depreciation of the exchange rate. Last autumn, the clients with incomes in RON repaying loans in euros had to cope with the pressure of the rate increase and of the serious depreciation of the RON.
As of the beginning of this year, the banks are bound by law to calculate interests for loans to individuals based on independent indicators (such as EURIBOR for euros or ROBOR for RON).
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