The Euribor continues its downward trend - what this means for your financing
.The Euribor, the benchmark interest rate for most variable rate mortgages in Spain, continues its downward trend, closing July at 3.53%. This marks the fourth consecutive month in which the interest rate has fallen, bringing it to its lowest level since January 2023. The drop of 12.4 basis points compared to June (3.65%) and even 62.3 basis points below the previous year's figure (4.149%) offers hope for many mortgage borrowers.
This development is particularly relevant for mortgage borrowers with variable interest rates who have linked their loan interest rates to Euribor. For example, a person with a mortgage loan of 150,000 euros taken out over 30 years at an interest rate of 0.99% plus Euribor will see a reduction in their monthly repayment of around 56.6 euros. This adds up to savings of almost 680 euros per year. As this interest rate change takes place at the beginning of the loan term, the impact is significant, as a considerable portion of the capital still has to be repaid.Simone Colombelli, Director of Mortgages at iAhorro, explains that the fall in Euribor was to be expected after last year's strong bull market. „In the mortgage market, we are sensing some confidence that the European Central Bank (ECB) will cut rates further after the holidays“, said Colombelli.For mortgage borrowers with variable interest rates, whose interest rates will be adjusted in the coming months, the outlook is positive. Experts from HelpMyCash are forecasting a moderate but sustained fall in the Euribor, which could intensify from the last quarter of the year. They expect the interest rate to close the year at between 3.25% and 3.50%.
The association Asufin is even more optimistic, assuming that the reference interest rate could fall to around 3.20% in September and end 2024 at around 3%. If this forecast proves correct, mortgage holders with variable interest rates could benefit from even lower monthly charges.For many Spanish households, the current development offers some relief in times of economic uncertainty. The falling Euribor could not only reduce financial burdens, but also boost confidence in the real estate market. The coming months will show whether the downward trend will continue and what further steps the ECB will take to support the economy.
