The Euribor, the index to which most variable mortgages are referenced, presents this Monday, November 25, 2024 a new annual minimum of 2.416%, so it remains below the 2.5% barrier in its daily rate, already threatening to close the month below that same barrier, something that has not happened since the month of September 2022.
Throughout the month of November, the Euribor has marked a clear downward trend, which was consolidated with a total of eight consecutive days of falls, accumulating 0.21 basis points of discount for the mortgage index. Now, in the final stretch of the month, it has risen slightly in several days, but the average remains the same.
In fact, if the downward trend continues, the Euribor could close for the first time in two years below 2.5%, a figure that has not been seen since September 2022, just with the beginning of the climb that marked historical highs.
Regarding this Monday’s data, the Euribor cuts 0.073 points compared to the previous day’s data, so the provisional average for the month of November remains at 2.52%threatening to exceed 2.5 downwards. So much so that, leaving the Euribor at an average of 2.4% in its daily rate in the days remaining until the closing, the monthly average would end up with a figure of 2.49%, so it would be enough to break that barrier.
How long will the Euribor declines continue?
The year 2024 is about to end, so our sights are already set on next 2025, when many wonder what will happen to the mortgage index and the installments to be paid. For the moment, the continued cuts by the European Central Bank (ECB), as well as the forecasts of experts, They make us think that the declines are going to continue in the same dynamic than in recent months, at least until June 2025.
In fact, these continuous drops in the daily rate and the cut per meeting discounted by the ECB lower the forecasts of the analysis houses. For now, Funcas, which collects in its economic forecast panel the opinion of 19 of the country’s most prestigious economic firms, such as bank or university research services, collects the consensus on how the Euribor will evolve in the coming quarters. For the second quarter of 2025, it aims for an average of 2.46%, while it has already lowered its predictions for the end of the year and In the fourth quarter it already points to an average of 2.35%.
But what do the people themselves say? Euribor futures? The Euribor is prepared with the interbank loans that the large financial institutions in Europe make among themselves, but, at the same time, it is also quoted in the financial markets, through financial futures. The most common is three months and its contracts are usually interpreted as a good indicator of what Euribor investors expect. While last week they were placed in the 2.06%the new data goes further and places the December 2025 contract in the 1.93%.
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 November 2023 as a reference (since most mortgages are reviewed for 12 months) , when the Euribor closed at 4.022%, The monthly fee was 753.43 euros.
Now, with the provisional average for November 2024, which stands at 2.52%, the mortgage payment of homeowners who have a review in September will drop to 601.02which means that They will pay 152.41 euros less than a year ago and the first drops in the monthly payments of those mortgaged will begin to be noticed.
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.
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