The Euribor puts into play the nine-month downward streak. The index to which most variable mortgages are referenced presents this Monday, January 13, 2025, a data in its daily rate of 2.576%which means the fifth increase so far this year and maximum levels since November, leaving the provisional average at 2.524%, therefore exceeding the psychological barrier of 2.5% that the index managed to surpass downwards in the closing December 2024.
In fact, last month, the Euribor gave good news to mortgage holders, closing at 2.436%, which consolidated the Euribor’s downward streak with the ninth consecutive month-on-month drop. However, this good streak could come to an end with the first stages of Januarysince there has been an aggressive start to the month of the year for this mortgage index.
Specifically, on Monday, the Euribor has increased by 0.012 basis points compared to the previous day. Although it is a slight increase, the accumulated daily data for the month of January already marks an increase of 0.116 basis points so far this month and The provisional average for January now stands at 2.524%. This data represents a maximum for November.
What is happening in the Euribor?
The famous mortgage index is very exposed to market fluctuations. It works just like a bond and continues to move in the same direction as the financial markets. Right now, chaos reigns in fixed income due to Trump’s arrival in the White House after winning the elections last November. The measures he is considering to begin his mandate, starting with a cannon of tariffs for Europe and Asiaand ending with a large tax cut, on paper it means unleashing inflationary pressures all over the world again.
The consequence is that American bonds are skyrocketing their profitability rapidly and infecting the rest of the debt market. British debt is at its highest since 2008 and the German debt since June. This circumstance raises the problem for central banks that it will be difficult for them to continue lowering rates in this context.
The Federal Reserve took note of Trump’s electoral promises and has already hit the brakes on rate cuts in 2025. But these days, as the New York magnate’s inauguration approaches, fixed income markets are tighteninginfecting the Euribor.
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 January 2024 as a reference (since most mortgages are reviewed at 12 months) , when the Euribor closed at 3.609%, The monthly fee was 718.46 euros.
Now, with the provisional average for January 2025, which stands at 2.524%, the mortgage payment of homeowners who have a review in September will drop to 603.24 euroswhich means that They will pay 115.22 euros less than a year ago.
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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