Euribor, the index to which most variable mortgages are referenced, presents this Wednesday November 13, 2024 a new annual low of 2.495%, breaking the 2.5% barrier, which has not happened since September 2022. Given the continued declines in the index, experts tracking it have continued to reduce their forecasts , but the last one, there are already five consecutive days of decline, it is already approaching the expert consensus for 2025.
This is the fifth consecutive annual minimum that the Euribor has reached during this month of November, after last October, when the index closed the seventh consecutive month of declines of 2,691%. Its daily rate index fell by 2.5% for the first time in two years. This has not happened since September 2022, at the height of the Euribor rise. With the data in hand, the provisional average for the month of November stands at 2.571%. If confirmed, it will mean a further reduction for mortgages due for review at the end of this month.
Given the downward momentum currently accompanying Euribor, the question is clear: How long will the fall in Euribor continue? What are the analysis firms saying and the experts’ forecasts by the end of 2025?
Well, to put things into context, we need to stop and look at the latest moves by the European Central Bank (ECB), which directly influence Euribor. At the last meeting, the ECB lowered interest rates by another 25 basis points, a deposit rate which remained at 3.25%. Furthermore, new rate cuts are already being considered, one per meeting, between now and the end of the year and at least until the summer of 2025. It is normal for the Euribor to get closer to the official rate of the bank, but, for now, the reductions are expected to continue next year.
This is very good news for those with adjustable rate mortgages, who have the prospect of future reductions in their payments. Experts are currently updating their forecasts based on the further fall in Euribor.
What is happening with Euribor forecasts?
Funcas In its panel of economic forecasts, it includes the opinion of 19 of the most prestigious economic companies in the country, such as banks or university study services. It includes the consensus on how Euribor will evolve over the coming quarters. For the second quarter of 2025, it is targeting an average of 2.46%, very close to current levels. For the third quarter, the forecast is 2.52%.
The same thing happened with the forecasts of CaixaBank. If these experts assured in their September 2024 report that the Euribor would be at 2.55% at the end of 2025, they lowered the forecast in the last updated report for the month of November, where they placed it at 2.18%. For his part, Interbank, which offers its forecasts on a quarterly basis, did so last September, placing the Euribor at 2.75%a figure which is far from that of other analysis houses and which, if updated, will surely be closer to 2% than 3%.
But what do the people themselves say about it? Euribor Futures Contracts right away? 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 last week they were placed in 2.06%the new data goes further and places the December 2025 contract in the 1.93%.
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 2.571%, the mortgage payment of owners who have a revision in September will drop to 604.73which means that They will pay 149 euros less than a year ago and the first reductions in monthly mortgage payments will begin to be felt.
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.
