The Euribor, the index to which most variable mortgages are referenced, has started the year with bad news, putting at risk the monthly downward streak with which it closed in 2024. In fact, the daily data for this Thursday, January 16, 2025 marks 2.563%the sixth increase in its daily rate so far in January. What could be considered an isolated rebound, for some experts means that the bearish cycle is very close to the end.
Specifically, on this Thursday, the Euribor has increased by 0.004 basis points compared to the previous day. Although it is a slight decrease, the average provisional January is already at 2.536% and endangers the downward closing that has occurred in the last nine months.
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.
Experts increase their forecasts
In this context, in which the Euribor seems to rebound with respect to the daily rate data from the previous year, putting in danger a downward close for this month of January, experts are already predicting the bottom of the index, increasing the index by two tenths compared to the previous review.
Thus, the latest report from Funcas on the economic forecasts for Spain suggests that, although the ECB will maintain its path of rate cuts, it will be necessary to take into account the increase in interest rates in the United States due to the difficulty that the Federal Reserve will have in containing inflation after Trump’s return.
That is why Funcas experts point out that the Euribor will be around 2.7% in 2025which means two tenths above what the previous forecast indicated and, above, the current price. Specifically, during the month of November 2024, the forecast panel indicated that on average it would be 2.46% for the second quarter of 2025 and around 2.5% for the third quarter of this same year.
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 rapidly increasing their profitability 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 2.536%, 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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