In October, the Euribor recorded its eighth monthly drop so far this year, closing the month at an average of 2.69%. It represents the lowest level in two years and a significant decrease compared to the 4.16% in October 2023. What’s more, in the interannual rate it experienced a drop of 1.462 points, the most pronounced since December 2009.
This confirms the good evolution of a key indicator for mortgages and advances a more than likely intensification of commercial competition between banks to offer loans.
The Euribor, which is technically the average at which a large number of European banks say they grant short-term loans to each other to lend to third parties, is key because in Spain it is used as a reference for housing loans.
This is an indicator linked to the monetary policy decisions of the European Central Bank (ECB), and it must be remembered that in June the European supervisor began a cycle of interest rate cuts that have left the reference rate at 3 .25%, waiting for another possible reduction towards the end of the year, which in any case will depend on the evolution of inflation. In relation to the latter, the data are good, since Since September, consumer prices in the eurozone have grown by 2%which is the maximum threshold recommended by the ECB.
As already said, inflation data will intensify the trade war between banks and will have a downward effect on prices for those who have a mortgage.
Discounts of more than 1,000 euros per year
The reduction will affect those who have a variable mortgage – not the fixed ones – that is reviewed in the month of November. The mortgage portal Kelisto.es has done the calculations, and for an average mortgage in Spain with annual review, The reduction will be 116.22 euros per month (1,394.64 euros less per year), which represents a reduction of 13%.
Logically, these data would change depending on the year the mortgage was signed, the amount and the repayment period agreed upon between the client and the bank. In this way, for a mortgage of less than 100,000 euros that was reviewed in November, the reduction would be 80.87 euros per month (-€970.44/year), while for a mortgage of 200,000 euros it would be -161.76 euros per month (-€1,941.12/year) and for one of 300,000 euros, -242.64 euros per month (-€2,911.68/year).
On the other hand, Ricardo Gulias, CEO of ‘Your Mortgage Solution’, It is estimated that for an average mortgage of 150,000 euros over 25 years, the savings in the monthly payment will be 120 euros: “considering the greater capital amortization, the savings will be close to 150 euros per month.”
Regarding mortgages that are reviewed semiannually, if the update corresponds to November, the average reduction that Kelisto.es estimates is 79.92 euros per month (479.52 euros less per semester), which represents a decrease of 9.35%.
Those who want to apply for a mortgage will also benefit from the results of the Euribor. As Estefanía González, spokesperson for Kelisto.es, explains, “for the moment fixed mortgages (-15.21% year-on-year) and the fixed section of mixed mortgages (-16.53%) lead the price drops, while “Variable mortgages accumulate a slighter fall (-4.48%) and the variable section of mixed mortgages continues to suffer price increases, although very slight (+1.37%),” González summarizes.
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