The Euribor is just one day away from closing the month of October 2024, at 2.698% on average. This figure is almost a point and a half lower than that recorded during the same month of 2024 (4.16%), which further confirms its downward trend, and will alleviate the burden of all those people who have to do in November the annual or semi-annual review of your variable mortgage. Furthermore, before the end of the year, the European Central Bank (ECB) plans to meet again (on December 12) to consider a new drop in official interest rates, which are currently at 3.25%. .
But how could a new rate cut affect the market? What will happen to the benchmark index over the next few months? How does its fall affect fixed and mixed mortgages? What plans does the bank have for 2025?
These and many other questions related to the mortgage market were discussed this Thursday, October 30, in the first consultation held between elEconomista.es and iSavings. Likewise, the readers of this newspaper and the followers of the mortgage comparator who followed the live stream through the Instagram, TikTok and YouTube channels of both iAhorro and ‘elEconomista’ were able to obtain answers to many of their questions, many of them related to How the Euribor and mortgage offers will advance in the coming months. LINK TO LIVE VIDEO at ? iSavings Office – elEconomista | The Euribor continues in free fall in October
Below, we leave some of the answers to the most outstanding questions that Enrique Wazzan, mortgage analyst at iAhorro and José Paino, mortgage expert at the comparator, resolved during the live broadcast.
We have been living for years with a very low Euribor since the great recession, which was even negative between 2016 and 2022. What will be the average value of the next decade?
You have to do different readings. If we look at economic cycles, we can see three peaks in the historical evolution of the Euribor that correspond to three ‘crises’. It is true that we have suffered a setback after Covid, that we came from a time with a negative Euribor and, if we calculate the last ten years the average was 0.6%, much lower than the current figure. But, not only do we have to assess how the Euribor behaves in the long term, but also in the medium and short term, when requesting a mortgage: from October 2023 (4.160%) until now (we are going to close around 2.70%), has dropped almost half a point and is something positive for all mortgage holders. That there is a Euribor, the cheaper the better, because it will give greater leverage to both companies and investors, and even families. (Response from José Paino).
There is a difference between the official ECB rate, the current 3.25%, and the one offered by banks on their mortgage loans. Is it to be assumed that, as the ECB lowers rates, this differential will fall and they will tend to equalize? Thank you so much.
Fortunately that is so. In fact, the rate reduction carried out in September and October has been taken into account, although it is not being applied as quickly as we would like. In any case, a drop in rates is expected, especially in the face of the ‘mortgage war’ that is expected next year. There are even some rumors that at the next ECB meeting they are no longer just thinking about cutting 0.25, if not half a point directly. They are still a little reluctant, but if that were to happen, we would obviously be talking about the mortgages, in this case fixed, for next year (March, April or even before being optimistic), would no longer be below the 2%, if not VERY below 2%. On some occasions we do see offers from clients, depending on their profile, who are already receiving offers close to 2% in fixed mortgages, with links, but we are already too close to that 2% TIN. (Response from Enrique Wazzan).
Do you think that banks are offering reductions in fixed rates in order to maintain their profits by making links with products such as insurance, which are much more expensive than in insurance entities outside the bank itself?
Obviously the main job of banks is to make money. There is an interesting issue: when you take out a mortgage, it is a product with which banks hope to make money in 5, 10, 15 or 20 years; But when you contract any discounted product through the bank (life insurance, home insurance, payment protection), every time you renew the bank you are already automatically getting benefits. That is why they are interested in any mortgage being linked to products, but it is also true that banks are increasingly giving more opportunities to have a very large mortgage without it being linked to products. We have offers with several banks, very good, without any discounted products. It is not mandatory to hire them. (Response from Enrique Wazzan).
When will we see the Euribor at 1%?
At least in the short term it is not going to happen. It is true that it rose very quickly and is also falling very quickly, although perhaps not at the speed we would like. In the end it also depends on how the economy behaves: now inflation is more or less controlled given that December is a month of high consumption, but France and Germany are beginning to get into serious economic problems, recently we have seen the news that a giant like Volkswagen is considering closing factories… So in the end the ECB is going to have to react and lower rates to be able to stimulate the economy in the euro zone. (Response from José Paino).
Therefore, Euribor at 1%? Hopefully soon, but this year I’m sure not, next I don’t think it will either and I would lean more towards 2026.
Over the next few months, elEconomista.es will continue to collaborate with iAhorro to report on the latest developments in the mortgage market and resolve all of our readers’ doubts. Therefore, if you have any questions about mortgages or housing, you can send them to [email protected] and also through any of the social networks of both iAhorro and elEconomista.es.
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