I'm in the process of carrying out a tracker transfer of a KBC tracker mortgage from a house I've just sold to a house I'm in the process of buying.
When I compare the letter of loan offer for the new house to the one for the original mortgage, there's now an additional special condition that wasn't part of the original mortgage -
"In determining the interest rate applicable to this Loan, we retain the right at our sole discretion to substitute one month EURIBOR (as determined by us on the first business day of each calendar month) for the REFI rate where one month EURIBOR is more than 0.25% above the REFI rate for a period of longer than 30 days. This substituted rate would no longer apply from the first day of the month following a continuous period of 30 days where the one month EURIBOR is less than 0.25% above the REFI rate, and the REFI rate would then be used in determining the interest rate applicable to this Loan. One month EURIBOR means the rate at which we shall determine to be the rate at which we are offered funds of like amount on the Euro Interbank Market for a period of one month."
I'm trying to understand the likelihood of that clause ever coming into effect, and am hoping someone will be able to help clarify EURIBOR, REFI and the relationship between the two.
If I'm looking at the right thing (on the euribor-rates.eu site), it seems one month EURIBOR is currently negative, and has been for most of the year, which suggests that that clause would have had no effect this year. However, those seem to be general EURIBOR rates, while the clause seems to specify that they'll consider the EURIBOR rate to be whatever rate KBC are offered. Are those one and the same thing, or do different banks get offered different EURIBOR rates based on their perceived credit-worthiness?
Has it always been the case that one-month EURIBOR is less that 0.25% above the REFI rate, or has it sometimes been above that? What scenarios in terms of economic conditions and outlook would typically cause one month EURIBOR to climb relative to REFI?
When I compare the letter of loan offer for the new house to the one for the original mortgage, there's now an additional special condition that wasn't part of the original mortgage -
"In determining the interest rate applicable to this Loan, we retain the right at our sole discretion to substitute one month EURIBOR (as determined by us on the first business day of each calendar month) for the REFI rate where one month EURIBOR is more than 0.25% above the REFI rate for a period of longer than 30 days. This substituted rate would no longer apply from the first day of the month following a continuous period of 30 days where the one month EURIBOR is less than 0.25% above the REFI rate, and the REFI rate would then be used in determining the interest rate applicable to this Loan. One month EURIBOR means the rate at which we shall determine to be the rate at which we are offered funds of like amount on the Euro Interbank Market for a period of one month."
I'm trying to understand the likelihood of that clause ever coming into effect, and am hoping someone will be able to help clarify EURIBOR, REFI and the relationship between the two.
If I'm looking at the right thing (on the euribor-rates.eu site), it seems one month EURIBOR is currently negative, and has been for most of the year, which suggests that that clause would have had no effect this year. However, those seem to be general EURIBOR rates, while the clause seems to specify that they'll consider the EURIBOR rate to be whatever rate KBC are offered. Are those one and the same thing, or do different banks get offered different EURIBOR rates based on their perceived credit-worthiness?
Has it always been the case that one-month EURIBOR is less that 0.25% above the REFI rate, or has it sometimes been above that? What scenarios in terms of economic conditions and outlook would typically cause one month EURIBOR to climb relative to REFI?
