Inversa's profitability vs. ECB rates and Euribor

Inversa Invoice Markets average yield far exceeds the recent rise in ECB rates and Euribor

Every so often, variables are published that, in the eyes of some citizens, may seem alien and strange as if it were not about them. But nothing could be further from the truth. Just as inflation can be felt when filling the supermarket trolley, ECB rates and Euribor also impact personal finances.

While these two rates cannot be strictly compared to the average Inverse Invoice Market yield, they are a very reliable benchmark of the state of the economy. Moreover, both are well established in the collective imagination, so the comparison can accurately illustrate Inversa's good data.

The graph in this article is a simple example of the evolution of these three magnitudes over time: starting just over four years ago, when Inversa landed on the market, and recording their rises and falls, together with those of the ECB rates and Euribor up to the present day.

Inversa, unbeatable in the face of rising ECB rates and Euribor

In February 2019, when Inversa Invoice Market's first invoice was financed, its average yield was around 4 %. At that time, the value of the Euribor was negative: -0.108 %. And the European Central Bank's interest rates had been at zero since March 2016.

Over the next three years, the interest provided by Inversa was growing slowly, suffering ups and downs, but moderate. At its best moments, it verged on 8 %. At its worst, it dipped slightly below 6 %. Meanwhile, winter continued for ECB rates and Euribor. The former remained frozen, while the latter remained negative.

But a little over a year ago, everything changed. In April 2022, the Euribor went into positive territory, a phenomenon that had not occurred since the beginning of 2016. And three months later, the ECB decided to raise rates to 0.5%. From then on, both began to take off, initially more aggressively, and currently more smoothly, especially in the case of the Euribor, whose curve seems to be flattening. And Inversa also stepped on the accelerator.

The most recent data are from June 2023, when ECB rates and Euribor rose to 4% and 4.007%, respectively. Inversa, for its part, has doubled these figures, climbing to 8.75 % and setting a new all-time high, with invoices already offering interest rates of 10 %.

The graph below shows that, in general, the trend of the three variables has been very similar. While ECB rates and Euribor remained at zero and negative, Inversa remained stable. And when these began to rise, Inversa soon replicated this movement, always remaining several points higher.

Why are ECB rates rising

However, to understand what these data imply, it is necessary to delve deeper into the meaning of ECB rates and Euribor.

The European Central Bank is paramount for all countries that use the euro as their currency. In addition to ensuring the security of the banking system, one of its main objectives is to control inflation and monitor price stability. And how do they achieve this? By raising interest rates.

Popularly known as the price of money, interest rates show the amount banks charge in the form of a commission in exchange for lending money to an individual or a company. They are, in short, the cost of borrowing.

But banks themselves also turn to the ECB for funding, borrowing money. For more than five years, these were granted free of charge. However, in July 2022, due to rising inflation and the economic slowdown caused by the war between Russia and Ukraine, the European Central Bank raised interest rates for the first time in over a decade.

This decision has a significant impact on the economy. The increase in financing costs, both to banks and to savers, is a measure aimed at encouraging savings, as it decreases the demand for credit. This, in turn, mitigates inflation expectations to avoid a price spiral and reduce real inflation. The rise in interest rates, therefore, hides an upturn in inflation.

How the Euribor affects everyday life

What about the Euribor? This index expresses the interest rate at which the major European banks lend money to each other. It is calculated daily by combining the interest on all loans in euros from the previous day. After eliminating the highest 15% and the lowest 15%, the remainder are averaged to obtain the final figure.

Again, this index significantly impacts everyday life, especially for people who have taken out a mortgage.

In variable-rate mortgages, the monthly payment to be made rises or falls depending on the evolution of the Euribor. From time to time, usually every six or twelve months, a review of the interest is carried out, updating it to the value of the Euribor. Therefore, if the Euribor has risen disproportionately, the pockets of families will suffer.

However, the data taken as a reference is not the daily one. There are different Euribor rates depending on the period covered: one week, one month, six months, one year. And in general, it is the last one that is usually considered for revising mortgages.

Currently, the June Euribor stood at 4.007%, the highest figure in more than a decade. But is there any way to counteract this upward trend in ECB rates and Euribor?

Inversas excellent profitability

Households are seeing firsthand how much more expensive it is for them to shop every day. And conventional investment products, such as bank deposits or government bonds, are not enough to cope with inflation and rising ECB rates and Euribor.

New investment and financing systems are becoming more valuable in this economic scenario. Alternative financing platforms like Inversa Invoice Market allow savers to enjoy substantial returns. Although the average profitability of the crowdfactoring platform grew to 8.75 % last June, the interest on some invoices is already as high as 10 %.

Operating in this marketplace is very simple. After registering on the online platform, users can access a wide range of invoices. Investors can browse through them until they find a company that meets their requirements, offers the desired return, and matches their level of risk, which third parties independently audit.

Once the transaction is closed, the saver receives the interest immediately. And when the due date arrives, and the debtor pays the bill, the original amount is reimbursed again. In any case, many transactions are completed within one, two, or three months, so it doesn't take long to enjoy the proceeds.

A solution within everyone's reach that allows investors to generate profits in a short time to prevent the ups and downs of the economy from threatening their financial stability.