Why do banks raise fixed rates and lower variable rates?

The European Central Bank (ECB) lowered reference interest rates to their historical minimum (zero or negative values, depending on the case) in 2016 and, as a consequence, the Euribor (which measures the interest at which banks lend each other the money) went negative in February of that year. This made variable-rate mortgages less profitable for entities: the sum of a negative Euribor plus the spread resulted in a very low rate. For this reason, they encouraged the contracting of fixed-rate mortgages, which had a higher interest rate. Last January, according to the latest data from the INE, 29.6% of mortgages were set up at a variable rate, with an average starting interest of 2.21%, while 70.4% were still at a fixed rate, with an interest of 2.69%.

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