Concept in Definition ABC

The term Euribor is really an acronym and corresponds to Euro Interbank Offered Rate, which translated would be the European type of offer interbank. Thus, we are talking about the interest rate paid by banks that are part of the euro zone when they lend money to each other. In other words, it is the price that banks put on money, as if it were a market.

Regarding the calculation of the Euribor is carried out by making an average of the interest rates of the most relevant and active banks in the euro zone. The central bank European is responsible for making these calculations and this information appears periodically in the different official gazettes of each nation.

The general idea of ​​the Euribor

Most people need to request money from a bank to start a business, to buy a vehicle or buy a home. When money is requested from Bank It must be taken into account that the bank itself also requests the money from other sources (for For example, investors who buy bank bonds or through a central bank loan European). However, sometimes this money is not enough and the bank must borrow from another bank and, logically, banks charge interest for lending money to each other. Thus, the interbank interest rate that exists in the so-called euro zone is the Euribor.

With regard to regulation and supervision of the Euribor, it is the European Central Bank institution that regulates the correct app of the Euribor and in a very specific way it is the entity that establishes the price of money, that is, the interest rate that affects the Euribor. In this way, the Euribor acts as an interbank reference, to which must be added the interest charged by each bank for the loan granted to customers and for this reason Euribor is indicated plus a certain percentage.

Different types of Euribor

Depending on the term in which the banks lend money, there are different types of Euribor. There is a one-week, one-month, six-month Euribor and, the most common, one-year Euribor. The latter is the one used as a reference to calculate products such as personal loans, bank deposits or mortgage loans.

In this way, if someone has a mortgage loan in relation to their home, the monthly payment to be paid will be referenced to twelve months, which implies that if the Euribor decreases this will mean a reduction in your fees for a year and if the Euribor increases the monthly fees will increase during the same period.

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