The Euribor, the index to which most variable mortgages refer, continues its sequence of declines in the last days before the end of October, with a figure that is maintained this Wednesday October 31, 2024 at 2.548%which further forces the monthly average, one day before the final close, with a drop of 0.029 basis points.
And so far in October, Euribor has accumulated up to seven consecutive days of decline. Although it increased last Wednesday by 0.052 basis points, this Friday the indicator experienced a sharp decline of 0.049 basis points, canceling out the average for the month. Now, so far this week, daily data has consolidated below the 2.6 barrier, with an annual low this Wednesday, which leaves Euribor with a monthly average for October at 2.697%.
With only one day left to know the final data for the month of October, a close below 2.7 is expected, which would, already confirmed, be the seventh consecutive monthly decline in the Euribor. In turn, this figure would support the biggest reduction in mortgage payments request for review since August 2009.
Indeed, in October 2023, the Euribor closed at 4.16%, the highest value of the last bullish cycle, while in 2024, if it finally closes around 2.7%, the index would include the seventh and largest annual decline so far in 2024, a total of 1.46 basis points compared to last year and 0.236 points less compared to the previous month.
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 real estate loan of 140,000 euros over 30 years (360 months), with a differential of 1% and taking the month of October 2023 as a reference (since most real estate loans are revised at 12 months), when the Euribor closed at 4.16%, The monthly fee was 765.30 euros.
From now on, with the provisional average for October 2024, which amounts to 2.718%, the mortgage payment of owners who have a revision in September will drop to 614.82 euroswhich means that They will pay 150.48 euros less than a year ago and the first reductions in monthly mortgage payments will begin to be felt.
What will happen to Euribor until the end of the year?
The recent meeting of the European Central Bank (ECB) again lowered interest rates by 25 basis points, as expected, with the deposit rate remaining at 3.25%. This is good news for mortgage lenders, since it seems that the evolution of Euribor, which depends directly on rates, will continue its downward trend for the rest of the year.
In fact, the market, experts and Euribor itself are convinced that the fall in rates will not stop in the coming months. At least until summer, It is clear that the ECB will reduce per meetingeven if it is also true that they already see the end of the falls.
So, the big question of when the index will stop falling to his response at the end of 2025while several analysts and the market agree on the date set to end the continued declines, which will bring the figure to 2% at the end of next year, even pushing a little further below this barrier, to a figure around 1.75%. Three-month futures, the most followed by investors and analysts, are up 1.9% in December 2025 contracts.
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.
