Euribor, the index to which most variable mortgages are referenced, presents this Monday, November 25, 2024 a new annual minimum of 2.416%, it therefore remains below the barrier of 2.5% of its daily rate, already threatening to close the month below this same barrier, which has not happened since the month from September 2022.
Throughout the month of November, the Euribor showed a clear downward trend, which was consolidated with a total of eight consecutive days of decline, accumulating 0.21 basis points of discount for the mortgage index. However, in the last part of the month, it has increased slightly for several days, but the average remains the same.
Indeed, if the downward trend continues, the Euribor could close for the first time in two years below 2.5%, a figure not seen since September 2022, just with the start of the increase which marked historic highs.
Regarding this Monday’s data, the Euribor falls by 0.073 points compared to the previous day’s data, therefore the the provisional average for the month of November remains at 2.52%threatening to exceed 2.5 on the downside. So much so that, leaving the Euribor at an average of 2.4% in its daily rate in the days remaining until the closing, the monthly average would end up reaching a figure of 2.49%, which would therefore be sufficient to break this barrier.
How long will the fall in Euribor continue?
The year 2024 is about to end, so our eyes are already turned towards next 2025, where many are wondering what will happen to the mortgage index and the installments to be paid. For now, continued budget cuts by the European Central Bank (ECB), as well as experts’ forecasts, They make us think that the declines will continue in the same dynamic than in recent months, at least until June 2025.
Indeed, these continued drops in the daily rate and the drop per meeting updated by the ECB lower the forecasts of the analysis houses. For the moment, Funcas, which collects in its panel of economic forecasts the opinion of 19 of the most prestigious economic companies in the country, such as banks or university research services, collects the consensus on the evolution of the Euribor over the next few quarters. For the second quarter of 2025, it is targeting an average of 2.46%, while it has already revised downwards its forecasts for the end of the year and In the fourth quarter it already indicates an average of 2.35%.
But what do the people themselves say about it? Euribor Futures Contracts? 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 2.52%, the mortgage payment of owners who have a revision in September will drop to 601.02which means that They will pay 152.41 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.
