12-month Euribor rate goes through 5.00%

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The 12-month Euribor rate, used as a benchmark for most Finnish housing loans, rose on Thursday to the psychological level of 5.000%, for the first time since December 2000.
     
Two factors have been pushing Euribor rates upwards.
      On the one hand, accelerating inflation and the European Central Bank's anti-inflation statements have reduced investors' expectations of any cuts in ECB benchmark rates, and on money markets there is already an anticipation of a rate hike.
      A second factor is the banks' common sense of caution as a result of the credit crunch in the international lending market. Banks are demanding a risk premium in their interbank borrowing, which lifts the market rate.
     
On Friday the 12-month Euribor jumped upwards once again to reach 5.028%, further increasing the borrowing burden of home-owners, although according to the Bank of Finland, an increasing number of Finnish borrowers are turning to the banks' own prime rates.
      The Nordea Prime Rate is 4.25%, rising from June 1st to 4.5%.
      The 6-month Euribor rate was also up appreciably on Friday, from 4.906% to 4.915%.
     
The longer-denominated Euribor rates have been heading inexorably upwards since February of this year, in company with burgeoning prices for crude oil, which surged again on Thursday, peaking at around USD 135 a barrel.
      The 12-month Euribor was at its highest level, 5.341%, in late August 2000.


Links:
  Bank of Finland: Euribor rates, daily values
  Euribor (European Interbank Offered Rate)
  Euribor (Wikipedia)

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