Expectations of lower interest rates in the future are easing the pockets of mortgage holders. The Euriborclosely linked to the future of monetary policy, It fell in August to 3.166%.The monthly average is 0.36 percentage points lower than in July. This is the biggest drop since February 2009.
In annual comparison, that is, compared to the same month of 2023, the Euribor moderated by 0.90 percentage points. This is the biggest drop since February 2013. Overall, the index ended the eighth month of the year at 3.088%.
With an average of 3.166%, the indicator records its sixth monthly decline since the beginning of 2024 and reaches its lowest levels of the year. However, it is worth remembering that the August data will only impact those who have a variable mortgage to be reviewed in September.
Savings on mortgages
For an average mortgage in Spain (with annual review), the drop in the reference index will result in a reduction in payment of 70.29 euros per month. —what this implies 843.48 euros less per year—, according to calculations by the savings site Kelisto.
The figures are similar to those provided by XTB, which takes as a reference the amount and average duration of repayment of a mortgage in our country, which is 150,000 euros and 25 years. According to the broker’s calculations, The reduction would be around 950 euros per year.which translates into a reduction in monthly payments of almost 80 euros.
It should be remembered that this data changes. depending on the year the mortgage was signed, the amount and the amortization period agreed between the customer and the bank.
In this way, for a mortgage of 100,000 euros If it is reviewed in September, the reduction would be 603.36 euros per year, while for a mortgage of 200,000 euros The saving would be 1,206.6 euros. In the case of a mortgage of 300,000 eurosThe annual reduction in fees would be 1,809.96 euros, as Kelisto indicates.
On the savings site, they point out that who reviews your loan biannually They will also benefit from the fall in the Euribor.
“As happened in previous months, those with a revised average mortgage in September will experience a reduction in payment of 39.27 euros per month (235.62 euros less per semester), which represents a decrease of 4.73%,” they explain.
Evolution in 2024
At the beginning of the year, markets thought that The European Central Bank (ECB) would keep interest rates high for longer than initially planned.
This has done Euribor broke in February with three consecutive months of decline and closed the month at 3.671% on average, slightly exceeding the January value.
In March, the Euribor recorded the second consecutive monthly increase and It closed the month at 3.718%, its highest level since November. But since then, the indicator has gradually fallen again, as ECB rate cuts looked increasingly real.
The benchmark indicator for variable rate mortgages closed April and May with slight declines. In June, the decline was more significant, at 3.65%, after the ECB cut interest rates for the first time in eight years.
“It is true that the ECB’s rate movement has gone as expected, but since the central bank gave the signal to start its easing cycle, The decline of the Euribor has been continuous“explains Itsaso Apezteguia Extramiana, Ebury analyst.
Indeed, the Euribor fell again in July, closing the month at 3.526% on average, its biggest annual decline in 11 years. This decline was followed by the decline in August, down to 3.166% on average.
Forecasts
Apezteguia considers that “looking ahead, it is very likely that the Euribor will continue to fall in the coming weeks, due to the Rate cut expected by the ECB at its meeting on September 12“.
The market gives a probability of almost 100% that the institution chaired by Christine Lagarde will reduce the price of silver by 25 basis points. Precisely because the decline is largely ignored by investors. “the effect on Euribor could be limited.”
“Even so, it is likely that this will allow Euribor to continue to fall. In the longer term, the evolution of Euribor will depend on the pace of rate cuts by the ECB,” believes the Ebury analyst. The firm is waiting for the indicator to be between 3% and 3.5% by the end of 2024.
At Kelisto, a slowdown in the decline of the Euribor is expected in the coming months, which could lead the indicator to close the year at around 3%. Of course, they stress that the fact that the decline is slowing “does not mean that the outlook for mortgage holders will deteriorate.”
“Given that the year-on-year comparison is made with the records of 2023 – very high in the last months of last year – those who have a variable loan that is reviewed in the coming months will continue to see their quotas decrease” explains Estefanía González, spokesperson for the site.
The Euribor forecast for 2024 made by other entities and organizations remains with little change compared to previous months. They place the indicator in a range of 3% to 3.5% by the end of 2024.
Bankinter and Funcas are those that predict higher figures for the end of the year (3.5% and 3.3% respectively), while CaixaBank places the Euribor at 3.03% and Asufin at 3%.
