The Euribor, the reference rate to which the majority of variable rate mortgages in Spain are linked, closed August at 3.166%, which means that it has already experienced five consecutive months of decline. The index ends the month below 3.1%, something that has not happened since December 2022.
The Euribor recorded its biggest monthly decline in twenty-five years, falling by 36 basis points in one go. The famous index fell 90.7 basis points below the 4.073% recorded a year ago..
The interbank reference rate thus reached its lowest value since December 2022, when the European Central Bank’s interest rate hike cycle was still half over.
And how many rate cuts are left?
Fintech experts at Ebury have suggested that the most likely scenario is that Euribor will continue to fall in the coming weeks due to an expected rate cut by the European Central Bank (ECB) at its meeting on September 12.
The market is anticipating three rate cuts from the ECB for the rest of the year. Central bank expected to leave benchmark rate at 3%Indeed, Euribor futures contracts, a reference widely used by analysts for their forecasts, place the index at this level.
If these ECB forecasts come true and we see the surge in the Euribor, which has been acting as a leading indicator since late 2023, it could continue to update the bank’s moves in 2025. According to market forecasts, there are three more cuts in the air until June next year, which could lower the deposit rate to 2.25%. The September 2025 Euribor futures are also around this level, at 2.28%.
The decline will result in a significant decrease in the mortgage payment if there is an annual balance sheet at the end of August. For a mortgage of 140,000 euros over 30 years, with a spread of 1%, The fee will be 76 euros per month cheaper than last year.. It is true that this does not compensate for the increases in 2023 and 2024, when in some months mortgages became more expensive by more than 280 euros per month. But per year it will mean a saving of 896 euros.
