The month of September ends as expected: the final monthly average remained at 2.936%, after the latest data for this month, which marks this Monday September 30, 2024 2.747%, falls even further, a dynamic that continued in the previous days and which marks a new annual minimum.
The monthly closing data is very good news for mortgage holders, as it marks the sixth consecutive month of decline, a minimum data that has not occurred since December 2022, for the first time below the barrier psychological. 3%, which has not happened since November 2022.
Concretely, after five consecutive days of decline, the Euribor increased on Friday by 0.016 basis points compared to the day before, although it was already confirmed at the time that it would close below the aforementioned barrier. Now in the latest month data, the mortgage index falls by 0.19 basis points compared to previous data.
Since the beginning of September, the benchmark mortgage index has recorded downward data, with a series of declines that already predicted a close below 3%, which had not happened since November 2022 and which signifies the sexual month of consecutive falls.
In fact, faced with this situation, the financial markets are already predicting a collapse of the Euribor, bringing the mortgage index below 2% in 2025. Concretely, and despite the fact that in recent weeks experts have been reluctant to take into account the latest aggressive cuts in the medium-term rate, futures anticipate a Euribor at 1.8% by the end of next year.
How far will the Euribor fall?
Expert predictions have become obsolete. Currently, Euribor has taken a downward trend, so much so that analysts who follow financial markets and the markets themselves are not keeping pace with the mortgage index. Actually, The Euribor is already below the forecasts established before the summer.
Experts predicted Euribor would end 2024 at 3%, but the speed at which cuts are accelerating suggests that the mortgage benchmark will remain below this level. Funcas, one of the most prestigious think tanks in the country, prepares a panel of experts that includes the country’s economic forecasts, and by extension certain financial variables like Euribor, and places it in the 2.83%. At the same time, Bankinter analysts believe that the year will end a 2.75%.
Why has it fallen so much?
The pronounced reductions in Euribor, which are very good news for holders of variable rate mortgages who must review their due date in order to pay quickly, are driven by expectations of rate cuts by central banks.
In fact, both the ECB and the Fed lowered rates this month. The European bank did it first. Lagarde, president of the organization, announced a new reduction to bring rates from 3.75% to 3.5%, after that made in June. Second, the latest Fed meeting ended Wednesday this week with a 50 basis point cut (the equivalent of two “single” 25 basis point cuts). And the best of all is that for the next meetings, Financial markets factor in intense rate cuts this may accelerate the fall in the Euribor.
For the Federal Reserve meeting next November 7 Another 50 basis point cut is already on the table. In the case of the ECB, even more influential in the evolution of the Euribor, a movement of similar magnitude to that of the Fed is already beginning to take hold. for the December 12 meeting. The markets discount two in a row by 25 basis points.
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 September 2023 as a reference (since most property loans are revised to 12 month), when the Euribor closed at 4.149%, The monthly fee was 757.81 euros.
Now, with the final average of September 2024, which amounts to 2.947%, the mortgage payment of owners who have a revision in September will drop to 632.06 euros, which means that They will pay 125.81 euros less than a year ago and the first reductions in monthly mortgage payments will begin to be felt.
