Heels|Finland’s most common mortgage reference rate finally fell below the 3.5 percent mark. The one-year euribor has fallen rapidly on Thursday and Friday.
Finland the most common mortgage reference rate, the 12-month Euribor, continues its rapid decline. On Friday, the interest rate was quoted at 3.426 percent. On Thursday, the interest rate fell below 3.5 percent for the first time this year. The last time the one-year euribor was lower than Friday was in March 2023.
“After a small freeze, the 12-month euribor then dropped quite properly in a couple of days. In fact, it’s the biggest two-day decline seen this year. However, we shouldn’t expect the decline to continue at this pace,” writes Nordea’s chief analyst Jan von Gerich message service in X.
Interest rates have already fallen quite clearly during the year, as a year ago the 12-month euribor was almost 0.7 percentage points higher. This year, the reference interest rate has so far persistently remained above 3.5 percent.
The drop in interest rates means that Finns will have more money to spend in the future. In Finland, about 30 percent of households have a mortgage.
After Thursday’s interest rate cut, Von Gerich estimated that there would be room for the Euribor to fall in the future, as the central bank’s interest rate cut expectations have been growing in the market in recent days with the support of weak economic data.
The Bank of Finland, which reports the daily Euribor interest rates in Finland, has a system technical problem, due to which the interest rates are not updated in their service.
The communication of the Bank of Finland says that they will try to fix the problem in the next few days.
European the central bank, the ECB, started easing monetary policy in June, when it lowered its key interest rate by 0.25 percentage points from four percent to 3.75 percent.
The market expects that there will be two more interest rate cuts this year.
The money market expects the decline in Euribor interest rates to continue. Derivative contracts concerning one year’s Euribor anticipate that the 12-month Euribor would have already fallen to around 2.57 percent a year from now.
However, market expectations are not a promise of the future. Expectations regarding Euribor have gone noticeably wrong several times over the last few years.
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