Sorry, I confused EONIA and Euribor. I need proof-reading. Nevertheless, that inspired me to take a peek at historical data, and it looks to me that the Euribor 12 month and the Euribor both follow the ECB Repo, no? (on a very macro level!) i.e. as you say, they determine the band within which it moves.

EURIBOR 12 month :


i.e. the repo rate finds its way into mortgages, very directly in the case of variable-rate ones.

But euribor and eonia are now trending sharply upwards, without a change in ECB rates.
EURIBOR 12 MONTH LAST YEAR:

 So who's driving who? Are the market rates going to force the ECB to raise its rates? I thought it was supposed to be the other way round. Is this a naive question? (Where does a bear shit?)

Given the already high rate of distress and default on mortgages, in Spain and elsewhere, and given that Euribor is at historically low levels, it's clear that if it went to 3 or 4%, there would be mayhem. For businesses as well as mortgagees, obviously.

It's unclear who at the EU level has a mandate and authority to oversee and foster financial stability

Fascinating remark... and I thought it was just me being thick! Is there any advantage in terms of public policy in maintaining non-transparency around such vital issues? I can see real value in opacity if you're a well-informed speculator, but in terms of public good...?  

Obviously, variable-rate mortgages are a source of financial instability.

I've always thought they were the Devil Incarnate. They encourage profligacy and short-termism in both the producer and the consumer. Personally, if I had taken a variable-rate mortgage instead of a fixed one in 2004, I would have been shitting blood for a few years. Is there any downside to outlawing them in the EU?

_{It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II}