124 euros of savings on mortgage payments each month. About 1,500 euros less per year – always for the average case. The Euribor closed the month at 2.69%, after its biggest monthly drop in almost 15 years – the seventh in a row – and gives another great relief to the ‘pocket’ of families with loans that are updated in November.
The interest rate cuts of the European Central Bank (ECB), which is transferred to the Euribor, are reducing the asphyxiation suffered by many households, doubly hit by the increase in the cost of their variable mortgages – the majority in our country – and by the inflation. Although the Euribor drops incur a paradox: they make loans cheaper but warm up already skyrocketing housing prices.
As the graph of this information shows, the Euribor was above 4% just a year ago. At the moment, it is at its lowest levels in the last two years, “and is on track to reach 2.5% at the end of this year; or even below,” according to Miquel Riera, analyst at the online comparator HelpMyCash.
Exactly, in October 2023, the Euribor closed on average at 4.16%. Almost 1.5 points above the average of the mortgage index in the same month of 2024. This significant drop represents a reduction of around 1,500 euros for a variable loan that is reviewed every 12 months of 150,000 euros, to 25 years and with a differential of one point plus the Euribor.
For the same example, but one that is updated every six months, the reduction is somewhat smaller—500 euros for the entire semester, 84 euros cut in each monthly installment—because the review will be done in November with respect to a Euribor. of 3.7%.
“With what we are seeing, especially in recent days, we could say that we are in a golden last quarter for mortgage holders. The Euribor has registered daily data of around 2.5% in October, something that we have not seen for just two years (October 2022), when the trend was completely contrary, since the market was affected,” observes Simone Colombelli, expert from another comparator, iAhorro.
“In addition, now, banks are making very good offers for the best profiles, with fixed mortgages that are very close to 2% NIR and mixed mortgages below that interest rate,” he adds.
In the middle of the month, the ECB decided to cut interest rates by 0.25 points, leaving the main reference at 3.25% (the deposit facility, which is automatically transferred to the Euribor). It is the third drop in the official ‘price’ since June due to the moderation of inflation in the eurozone as a whole and to breathe oxygen into the economy, especially due to the stagnation in Germany and the weakness of growth in France.
Inflation at the ECB’s target of 2%
“The disinflationary process is well underway,” noted the Governing Council of the ECB in its statement of October 17 —in October the CPI remained at 2% in the eurozone as a whole, and at 1.8% in our country. country-. Furthermore, in the usual press conference after making the decision, the president of the institution, Christine Lagarde, noted “weaker than expected economic activity”, mainly in the industrial sector, and also cited lower spending by households or the slowdown in job creation.
With “downside risks” due to the threats of a drop in confidence among companies and families and the impact of Israel’s genocide on the Palestinian people of Gaza and also its attacks on Lebanon. Although the Frenchwoman wanted to clarify that the growth of the economy is not the main concern of the ECB, since its mandate is price stability. At a macroeconomic level, Spain is a positive exception.
Activity in our country maintains a strong growth rate. The GDP (Gross Domestic Product) advanced 0.8% in the summer, compared to the second quarter, according to the INE (National Institute of Statistics) this Wednesday.
On October 22, the IMF (International Monetary Fund) revised Spain’s projection for 2024 up by half a point, up to 2.9%, confirming that our country leads the main economies in the world. This forecast could once again fall short. “Given the improvement in activity until September, the growth prospects for 2024 for the Spanish economy could reach 3%, above the estimated average for the Eurozone (0.8%),” recognizes the main business association, the CEOE.
During the summer, the important contribution of private consumption stands out in a context of moderation in inflation. The increase in family spending was 2.8% year-on-year and “is supported by the gain in purchasing power of workers, which increased by more than one point in the last year, and by the positive evolution of employment,” as defended by the Ministry of Economy.
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