124 euros savings on mortgage payments every month. Around 1,500 euros less per year – still for the average case. Euribor closed the month at 2.69%, after its biggest monthly decline in almost 15 years – the seventh in a row – and gives another great relief to the “pocket” of families with loans updated in November.
The interest rate cuts of the European Central Bank (ECB), transferred to Euribor, alleviate the asphyxiation suffered by many households, doubly hit by the increase in the cost of their variable mortgage loans – the majority in our country – and by inflation. Even if the fall in Euribor presents a paradox: it makes loans cheaper but heats up real estate prices that are already skyrocketing.
As the chart in this information shows, Euribor was above 4% just a year ago. It is currently at its lowest level in the last two years, “and is on track to reach 2.5% at the end of this year; or even below,” according to Miquel Riera, analyst for the online comparator HelpMyCash.
Precisely, in October 2023, the Euribor closed on average at 4.16%. Nearly 1.5 points above the average of the mortgage index for the same month of 2024. This significant drop represents a reduction of around 1,500 euros for a variable loan reviewed every 12 months of 150,000 euros, at 25 years old and with a differential of one. no more Euribor.
For the same example, but updated every six months, the reduction is a little lower – 500 euros for the entire semester, 84 euros reduction on each monthly payment – because the revision will take place in November compared to a Euribor. 3.7%.
“With what we’re seeing, especially in recent days, you could say we’re in for a golden last quarter for mortgage holders. Euribor recorded daily data of around 2.5% in October, something we had not seen for only two years (October 2022), while the trend was completely opposite, since the market was affected”, observes Simone Colombelli, expert from another comparator, iAhorro.
“In addition, now banks are making very good offers for the best profiles, with fixed real estate loans very close to 2% NIR and mixed loans below this interest rate,” he adds.
In the middle of the month, the ECB decided to lower interest rates by 0.25 points, leaving the main reference at 3.25% (the deposit facility, automatically transferred to Euribor). This is the third drop in the official “price” since June, due to the moderation of inflation throughout the euro zone and to breathe oxygen into the economy, particularly due to stagnation in Germany and weak growth in France.
Inflation at ECB’s 2% target
“The disinflationary process is on track,” the ECB Governing Council noted in its October 17 statement – in October the CPI remained at 2% in the eurozone as a whole and at 1.8 % in our country. Furthermore, during the usual press conference after the decision-making, the president of the institution, Christine Lagarde, noted “lower economic activity than expected”, mainly in the industrial sector, and also mentioned the decline household spending or the slowdown in job creation.
With “downside risks” due to threats of loss of confidence from businesses and families and the impact of the Israeli genocide on the Palestinian people of Gaza and also its attacks against Lebanon. The Frenchwoman, however, wanted to clarify that the growth of the economy is not the main concern of the ECB, since its mandate is price stability. At the macroeconomic level, Spain constitutes a positive exception.
Activity in our country maintains a strong growth rate. GDP (Gross Domestic Product) increased by 0.8% in the summer, compared to the second quarter, according to the INE (National Institute of Statistics) this Wednesday.
On October 22, the IMF (International Monetary Fund) revised Spain’s projection for 2024 up half a point, to 2.9%, confirming that our country leads the world’s major economies. This forecast could once again prove insufficient. “Given the improvement in activity until September, the growth outlook for 2024 for the Spanish economy could reach 3%, above the estimated average for the euro zone (0.8%)” , recognizes the main employers’ association, the CEOE.
During the summer, the significant contribution of private consumption stands out in a context of moderating inflation. The increase in family expenses was 2.8% over one year and “is supported by the gain in purchasing power of workers, which increased by more than one point last year, and by the evolution positive employment”, as defended by the Ministry of the Economy.
