The Euribor, the index to which most variable mortgages are referenced, presents this Tuesday, December 3, 2024, a data in its daily rate of 2.356%which means that it has set a new annual minimum in the last month of the year, following the downward trend after closing November with the largest year-on-year drop in the last 15 years.
Specifically, the index has passed the 2.4% barrier downwards, falling by 0.075 percentage points compared to the previous dayafter the first data of the month remained at 2.431%, so the provisional average for December is, for now, at 2.393%. If the downward streak that the Euribor is experiencing in recent months continues, it could end the year below 2.4%, something that has not occurred since September 2022.
The recent The closing of the month of November placed the final average of the Euribor at 2.506%a difference compared to the same month last year of 1,516 basis points, since in November 2023 the Euribor closed at 4.022%. This is, therefore, the largest interannual decrease in the last 15 years, since December 2009. Specifically, in 2009, the Euribor closed the last month of the year at 1.242%, which meant, at that time, then a drop of 2.21 basis points compared to the same month in 2008 (3.452%).
What does this mean? That those variable rate mortgage payments that are pending review this month will notice the biggest drop in a decade.
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 2.506%, the mortgage payment of homeowners who have a review in September will drop to 629.13which means that They will pay 124.3 euros less than a year ago.
What will happen in 2025 with the Euribor?
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 a few weeks ago they were placed in the 2.06%subsequent data went further and placed the December 2025 contract in the 1.93%. Now, the most recent data suggests December 2025 futures in the 1.85%.
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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