Reference Indices
The benchmarks are a very important and require more attention than customers are accustomed to provide. These indicators are those that apply to loans variable rate mortgage reached a time to review and update your interest. That is, they depend on the interest rate you will pay for nearly the entire life of the loan.
But there are several on this site only discusses the officers. These are some objective parameters, which compiles the monthly Bank of Spain and that, in addition to the Official State Bulletin (BOE), are published in almost all newspapers. It is very easy to find. They tend to be located in the pages of economy, close to the tables of bag and under a headline which is entitled Indices of reference of mortgage loans. Let's look at each one.
The indices which are detailed below are those that are official in nature and develops and publishes the Bank of Spain.
- Banks Index
Is the average interest rate on mortgage loans to more than three years that banks have granted during that month for the acquisition of free housing and is expressed in annual percentage rate (APR). It is, therefore, an average of the mortgage loan contracts at that time have been formalized in the market and that the Bank of Spain has calculated the data referred to it by the entities. - Index funds
It is exactly the same as above but in this case reflects the average rates of mortgage loan contracts signed in savings. It is also expressed in APR. - Average rate for the whole of credit This index includes the previous two and, therefore, reflects a much broader half.
- ECSC indicator of the types of assets
This index is an average annual rate equivalent (APR) charged by the savings banks to mortgage loans and personal loans. - Interbank rate a year "Euribor"
It is defined as the simple average of the daily values of the days with market each month, the spot rate published by the European Banking Federation for transactions in euro deposit term of one year calculated from the bid by a panel 57 banks of the most active and largest rating rating in the Euro Zone. It is calculated on the basis of 360 days and is fixed at 11 am (CET) if at least 50% of the banks participating in the panel have made an effective contribution. The average is carried out after the removal of 15% of contributions extreme and is rounded to three decimal places. This reference was defined by the circular 7 / 1999 of June 29, for credit. This is not the kind of a given day, so the ups and downs and other one-day fall in the monthly average diluted that produces the Bank of Spain. Despite that, this index, an indicator to be clearly monetary, is the fastest reflects movements - ups and downs of-types that occur in financial markets. Therefore, this index draws more sudden movements and intense than the previous ones.
In accordance with the provisions of the Law on introduction of the euro, the order of December 1, 1999 abolished the "official" MIBOR's mortgage operations for mortgage loans drawn after January 1 2000. The same Order establishes a new formula for calculating the rate of interest rate mercinterbancario one year (MIBOR) with effect from that date (January 1, 2000). - Profitability of domestic public debt
It is an index used very little. Is calculated on the average return to Treasury bonds traded between two and six years' term.
How to apply benchmarks to review the interest rate?
The benchmarks are those that guarantee the customer that when revising the interest on your loan this will be adjusted to market prices because, as we saw when analyzing the indicators, they are nothing more than the average of loans signed in a given period.
Note that the publication of the indexes usually have a delay and that therefore the index that you would be applied to the last published or available on the date it comes to the review.
But even more important is the application to the index of so-called margin or spread, which is nothing more than the amount that the entities added to the benchmark index which is taken as a base. For example, if a client has hired a loan at Euribor plus a point and the Euribor was at 3%, the new interest rate of 3% this credit is more established in point differential, ie 4%.
The differential is not that it applies equally to all indices. In the case of index funds and banks, the differential is usually lower than that applied to the Euribor. The reason is simple: the Euribor often from a lower value to match the market and adding a larger differential. However, as shown in the chart below, the major benchmarks just traveling the same path.
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