Euribor-linked mortgages
Do you have an ABN AMRO mortgage that is linked to Euribor?
Euribor-linked mortgages have not been available to new borrowers since 2009. If you have an existing mortgage that is linked to Euribor, there are some aspects you need to consider.
Relevant aspects to consider:
- You cannot renew the term of a mortgage component that is linked to Euribor.
- If you are moving house, you cannot transfer the Euribor rate to a new mortgage. If you have a former Fortis mortgage, you may be able to transfer the Euribor rate to a new mortgage.
- If the interest rate on an existing loan is up for revision, Euribor will no longer be offered.
Read more about ongoing legal proceedings involving the margin on the Euribor rate.
Please do not hesitate to call us if you have any further questions about your Euribor-linked mortgage. You can also schedule an appointment online.
What is Euribor?
Euribor stands for Euro Interbank Offered Rate. Many European banks issue loans in euros at this variable interest rate. The Euribor rate is set every day at 11 a.m. and communicated to all stakeholders and to the press.
The level of the Euribor rate depends mainly on economic conditions: the growth of the economy and the level of inflation. Euribor is unpredictable as a result.
What is the Euribor rate?
If you have a mortgage that is linked to the Euribor rate, your mortgage payments will consist of:
- 1-month Euribor: the level of this rate can change from month to month. For more details, see your monthly interest confirmation letter.
- A margin: this margin is meant to cover our costs. We review our cost levels every three months. Based on our review, we decide whether to lower or raise your margin.
Euribor is a benchmark
The interest rate is based, in part, on the Euribor rate. This is a so-called benchmark. The European Money Markets Institute (EMMI) is responsible for providing the Euribor index. EMMI sets and publishes the benchmark.
Possible Euribor replacement
In the future, it may be the case that we are no longer permitted to use the 1-month Euribor, for instance due to changes in legislation and/or regulations. Euribor currently satisfies the regulations, which is why we are still using it. If this changes, we will contact you.
Questions on changes to surcharges
Why does the bank make changes to the surcharge?
To ensure healthy business operations, the bank needs to be able to change the surcharge. In response to market conditions, the surcharge for mortgages with the Euribor interest rate was increased in 2009 and 2012. The bank has since also lowered the surcharge on a number of occasions for the same reason.
Was the surcharge increased for all customers?
The surcharge was initially increased in 2012 for all customers with a mortgage based on the Euribor interest rate. In November 2012, the surcharge increase for former Fortis customers with quotes stating ‘vaste opslag’ [fixed surcharge] was reversed. The surcharge increase was also reversed in a number of cases in which individual agreements had been made. The surcharge increase was not reversed for any other customers.
What does the surcharge on top of the 1-month Euribor interest rate consist of?
You pay a surcharge in addition to the 1-month Euribor interest rate. This surcharge is used to cover our costs and consists of the following elements:
Surcharges based on capital market and capital costs developments
On top of the basic rate, we also pay surcharges if we buy money on the money and capital market over a longer period of time. ABN AMRO also incurs costs for keeping the money (capital). These capital costs are also included in the interest we charge.
Running costs
The running costs are the bank’s own operating costs. These costs are both non-recurring and recurring costs.
Non-recurring costs include marketing and staff costs for assessing credit applications and compiling files.
Recurring costs are costs incurred for managing a mortgage portfolio, such as risk management, arrears management and monthly interest collection costs.
Individual risk surcharge
This surcharge is part of the individual risk ABN AMRO runs for its customers’ loans. The surcharge amount depends on the ratio between the value of the collateral and the loan amount.
Profit surcharge
This surcharge goes towards financing future business activities.
What are the main reasons the surcharge can increase or decrease?
The main reasons the surcharge can increase or decrease are our ‘liquidity surcharge’ and our ‘capital costs’.
Liquidity surcharge
The money we lend to our customers must first be borrowed from investors. Customers need to be able to trust that a bank holds sufficient funds to cover a long period of time, which is why we borrow money for periods longer than one month. Investors also want a higher interest rate than the Euribor interest rate. The same is true of our savings account holders. The higher interest rate we pay for our loans is called the ‘liquidity surcharge’.
Capital costs
Banks must always own part of the money they lend. They have to reserve funds for this. We are obliged by law to increase our reserves, meaning that we as a bank have a strong balance sheet, but also incur additional ‘capital costs’.
How often can the surcharge change and by what percentage?
We review our charges each quarter and decide whether your surcharge can be lowered or needs to be increased. Any changes to your surcharge will take effect from the beginning of a quarter i.e. 1 January, 1 April, 1 July or 1 October. You will be notified of any such changes in advance in your interest confirmation letter. The surcharge can change by a minimum of 0.1% and a maximum of 0.35%, meaning that there are no longer unexpected, significant changes to your surcharge.
Why has the surcharge been decreased in recent years?
Why did we lower the surcharge from 1 April 2019?
- surcharges based on capital market and capital costs developments. This is why we decided to lower the surcharge by 0.15% from 1 April 2019.
Why did we lower the surcharge from 1 October 2018?
- surcharges based on capital market and capital costs developments. This is why we decided to lower the surcharge by 0.15% from 1 October 2018.
Why did we lower the surcharge from 1 April 2018?
The following surcharge component changed:
- surcharges based on capital market and capital costs developments. This is why we decided to lower the surcharge by 0.20% from 1 April 2018.
Why did we lower the surcharge from 1 April 2017?
The following surcharge component changed:
- surcharges based on capital market and capital costs developments. This is why we decided to lower the surcharge by 0.15% from 1 April 2017.
Why did we lower the surcharge from 1 April 2016?
The following surcharge components changed:
- surcharges based on capital market and capital costs developments
- running costs
- individual risk surcharge This is why we decided to lower the surcharge by 0.2% from 1 April 2016.
Why did we lower the surcharge from 1 April 2015?
The following surcharge component changed:
- surcharges based on capital market and capital costs developments. This is why we decided to lower the surcharge by 0.15% from 1 April 2015.
Reasons for taking out a mortgage from ABN AMRO
Stay on top of your mortgage
Track your mortgage on Internet Banking or in the ABN AMRO app. It’s secure and easy.
Make changes to your mortgage yourself
From changing the interest rate to making additional repayments. Making changes to your mortgage couldn’t be easier. You can do it yourself online.
Videoconferencing with an adviser
Video Banking makes it easy. Simply use your computer, smartphone or laptop.