Mortgages, 2019 will be the year of the new Euribor. What changes for Italians
Why do we need to change the Euribor?
The European money markets institute (EMMI) is changing the way the rate is calculated so that it complies with the requirements set by the principles adopted at international level and to avoid the emergence of new financial scandals that may involve it as in the recent past.
What is the reform?
We will move from a calculation process based only on the findings made by a panel of banks (20 at present) to a "hybrid" methodology whereby the rate will be determined whenever possible through actual market exchanges for different maturities and, in the absence of transactions, on the estimates of the cost of funding carried out by the Panel banks.
What are the times?
Emmi launched a public consultation between market operators, trade associations and institutions on a document that also contained some tests carried out, which ended at the end of November and whose results will be announced by January. However, the new rate will have to be seen no later than January 1, 2020.
What are the consequences for borrowers?
Since this is a change in the calculation method and not a real exchange rate, it should not be necessary to update existing contracts. Moreover, from a practical point of view, the differences in value between the old and the new rates that emerge from the tests seem minimal (on average between 1 and 5 basis points) and in favor of the borrowers.
Why is the Euribor (and its successor) so important?
Because to this index (which lasts from 1 week to 12 months) many bank contracts, derivatives and loans are linked. These also include floating rate mortgages.
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