Madrid – The main reference rate for mortgages fell in November for the second month in a row, giving some relief to Spanish borrowers.

The average one-year Euribor rate, the rate charged by European banks among themselves for 12-month money, dropped to a preliminary 4.600 percent in November from 4.647 percent in October.

That would suggest that after two years of continuous rises following a series of interest-rate hikes by the European Central Bank, the Euribor peaked at 4.725 percent.

Since the liquidity crunch emerged after the summer in the wake of the US subprime mortgage crisis, the ECB has decided to keep interest rates on hold and has pumped funds into the money markets to help out stretched lenders.

However, inflation in the euro zone came in at 2.6 percent last month, well above the ECB’s target of close to, but below, 2 percent in the medium term.

The fact that Spaniards are still to feel the pinch of higher borrowing costs was shown by the latest loan default figures from Standard & Poor’s.

The rating agency’s RMBS Delinquency Index of home loans in Spain climbed to 2.02 percent in the third quarter, almost three times higher than in 2002 when S&P started to compile the data. The rate in the second quarter was 1.89 percent.

[Copyright EL PAÍS, SL. 2007]

Subject: Spanish news