The Euribor, the index to which most variable mortgages are referenced, consolidates its plummet this Monday, October 21, 2024, when has reached the figure of 2.63%a figure that represents the sixth day of consecutive falls, as well as a new annual minimum, already threatening the 2.6% barrier downwards. The declines have accelerated after last week’s ECB meeting, in which it seems very clear that rate cuts will continue throughout 2025, a perspective that favors further falls in the Euribor.
The Euribor daily rate data records a decrease of 0.079 basis points compared to the previous day, although adding the last streak of daily falls, a total of six consecutive, gives a total of 0.192 basis points, almost reaching the objective of exceeding downwards the barrier of 2.6 in daily rate, something that has not happened since the month of October 2022.
Regarding the monthly average for October 2024, everything points to the continuation of the declines, following the trend of the entire year 2024, good news for those with variable rate mortgages who have to review their payments soon. Currently, the Provisional monthly data for October remains at 2.744%.
What will happen until the end of the year?
The recent meeting of the European Central Bank (ECB) lowered interest rates again by 25 basis points, as planned, with the deposit rate remaining at 3.25%. This is good news for mortgage holders, since it seems that the trend of the Euribor, which depends directly on rates, will continue the downward trend for the remainder of the year.
In fact, the market, experts and the Euribor itself are convinced that the rate declines will not stop in the coming months. At least until summer, It is clear that the ECB will cut per meetingalthough it is also true that they already glimpse the end of the falls.
Thus, the big question about when the index will stop falling has its answer at the end of 2025when several analysts and the market agree on the date set to put an end to the continued declines, which will take the figure to 2% at the end of next year, even pushing a little further below this barrier, to a figure around at 1.75%. Three-month futures, the most followed by investors and analysts, are above 1.9% in December 2025 contracts.
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.
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 October 2023 as a reference (since most mortgages are reviewed at 12 months) , when the Euribor closed at 4.16%, The monthly fee was 765.30 euros.
Now, with the provisional average for October 2024, which stands at 2.744%, the mortgage payment of homeowners who have a review in September will drop to 616.74 euroswhich means that They will pay 148.56 euros less than a year ago and the first drops in the monthly payments of those mortgaged will begin to be noticed.
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