The Euribor, the index to which most variable mortgages are referenced, consolidates its plummet this Tuesday, October 22, 2024, when has reached the figure of 2.622%a figure that represents the seventh day of consecutive falls, as well as a new annual minimum, already threatening the 2.6% barrier downwards.
Specifically, these declines have accelerated after the ECB meeting last week, in which it seems very clear that rate cuts will continue throughout 2025a perspective that favors further falls in the Euribor, a joy for mortgage holders, who will be able to see the index between 1 and 2% at the end of next year, according to forecasts.
The consecutive falls of the Euribor
The daily rate data for the Euribor registered a decrease of 0.079 basis points compared to the previous day, to which is added another new although slight drop of 0.003 in the daily rate this Tuesday, consolidating the downward trend, with a total of seven consecutive days of decline.
Adding this last streak of daily falls, a total of seven consecutive ones, gives a total of 0.195 basis points, almost reaching the objective of exceeding downwards the barrier of 2.6% in daily rate, something that It has not happened since October 2022.
Regarding the monthly average for October 2024, everything points to the continuation of the declines, following the trend of the entire year 2024, good news for those with variable rate mortgages who have to review their payments soon. Currently, the provisional monthly data for October remains at 2.737%, that is, 0.199 points less compared to the close of the previous month.
What will happen until the end of the year?
The recent meeting of the European Central Bank (ECB) lowered interest rates again by 25 basis points, as planned, with the deposit rate remaining at 3.25%. This is good news for mortgage holders, since it seems that the trend of the Euribor, which depends directly on rates, will continue the downward trend for the remainder of the year.
In fact, the market, experts and the Euribor itself are convinced that the rate declines will not stop in the coming months. At least until summer, It is clear that the ECB will cut per meetingalthough it is also true that they already glimpse the end of the falls.
Thus, the big question about when the index will stop falling has its answer at the end of 2025when several analysts and the market agree on the date set to put an end to the continued declines, which will take the figure to 2% at the end of next year, even pushing a little further below this barrier, to a figure around at 1.75%. Three-month futures, the most followed by investors and analysts, are above 1.9% in December 2025 contracts.
How is the Euribor calculated?
The Euribor responds to the name European InterBank Offered Rate and is calculated through a panel of European banks that report every day at what rate interbank loans are made. As of 2020, calculations are carried out in a hybrid manner. The panel data is included, but also the market’s own estimates, with the aim of reducing volatility and the risk of manipulation, to which these indices were subjected at the beginning of the century.
The panel is made up of 18 European banksamong which are Santander, BBVA, Barclays, Deutsche Bank or Unicredit.
Every business day at eleven in the morning, the average interest rate at which financial institutions lend capital to each other is published. one week, one month, three months, six months and 12 months.
How does it affect my mortgage?
This downward trend that the Euribor is experiencing directly affects mortgage reviewsboth semiannual and 12 months, since banks recalculate variable mortgages with the monthly average, rising or falling compared to the data from six or twelve months ago.
To see it with an example, for a mortgage of 140,000 euros for 30 years (360 months), with a differential of 1% and taking the month of October 2023 as a reference (since most mortgages are reviewed at 12 months) , when the Euribor closed at 4.16%, The monthly fee was 765.30 euros.
Now, with the provisional average for October 2024, which stands at 2.737%, the mortgage payment of homeowners who have a review in September will drop to 616.74 euroswhich means that They will pay 148.56 euros less than a year ago and the first drops in the monthly payments of those mortgaged will begin to be noticed.
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