Euribor, the index to which most variable mortgages are referenced, presents this Tuesday December 3, 2024, a data in its daily rate of 2.356%meaning it set a new annual low for the final month of the year, following the downward trend after November closed with the biggest year-over-year decline in the last 15 years.
Concretely, the index crossed the 2.4% mark downwards, down 0.075 percentage points from the previous dayafter the first data of the month, it remained at 2.431%, so the provisional average for December is, for the moment, at 2.393%. If the downward trend experienced by Euribor in recent months continues, it could end the year below 2.4%, which has not happened since September 2022.
The recent The November close placed the final Euribor average at 2.506%a difference compared to the same month last year of 1,516 basis points, since in November 2023 Euribor closed at 4.022%. This is therefore the largest interannual decline in the last 15 years, since December 2009. Concretely, in 2009, the Euribor closed the last month of the year at 1.242%, which meant, at that time, a drop of 2.21 bases. points compared to the same month of 2008 (3.452%).
What does this mean? That adjustable rate mortgage payments that are up for review this month will see the biggest drop in a decade.
How does this impact my mortgage?
This downward trend experienced by the Euribor directly affects mortgage reviewsboth semi-annual and 12-month, since banks recalculate variable mortgages with the monthly average, up or down compared to data from six or twelve months ago.
To see it with an example, for a property loan of 140,000 euros over 30 years (360 months), with a differential of 1% and taking the month of November 2023 as a reference (since most property loans are reviewed for 12 month), when the Euribor closed at 4.022%, The monthly fee was 753.43 euros.
From now on, with the provisional average for November 2024, which amounts to 2.506%, the mortgage payment of owners who have a revision in September will drop to 629.13which means that They will pay 124.3 euros less than a year ago.
What will happen in 2025 with Euribor?
The year 2024 is about to end, so our eyes are already turned towards next 2025, where many are wondering what will happen to the mortgage index and the installments to be paid. For now, continued budget cuts by the European Central Bank (ECB), as well as experts’ forecasts, They make us think that the declines will continue in the same dynamic than in recent months, at least until June 2025.
Indeed, these continued drops in the daily rate and the drop per meeting updated by the ECB lower the forecasts of the analysis houses. For the moment, Funcas, which collects in its panel of economic forecasts the opinion of 19 of the most prestigious economic companies in the country, such as banks or university research services, collects the consensus on the evolution of the Euribor over the next few quarters. For the second quarter of 2025, it is targeting an average of 2.46%, while it has already revised downwards its forecasts for the end of the year and In the fourth quarter it already indicates an average of 2.35%.
But what do the people themselves say about it? Euribor Futures Contracts? Euribor is prepared through interbank loans that major European financial institutions contract among themselves, but, at the same time, it is also listed on financial markets, through financial futures contracts. The most common is three months and its contracts are generally interpreted as a good indicator of what Euribor investors expect. While a few weeks ago they were placed in 2.06%subsequent data went further and placed the December 2025 contract in the category 1.93%. Now, the most recent data suggests December 2025 futures contracts in the 1.85%.
How is Euribor calculated?
Euribor is called the European InterBank Offered Rate and is calculated by a panel of European banks which report every day at what rate interbank loans are granted. Since 2020, calculations have been carried out in a hybrid manner. Panel data is included, but also the market’s own estimates, with the aim of reducing volatility and manipulation risks, to which these indices were subjected at the beginning of the century.
The panel is made up of 18 European banksincluding Santander, BBVA, Barclays, Deutsche Bank and Unicredit.
Every working day at eleven o’clock in the morning, the average interest rate at which financial institutions lend capital is published. one week, one month, three months, six months and 12 months.
