2023-12-30 07:08:32
Fiscal year 2024 will come with one of the best news for mortgaged homes. After curbing the feared inflation, the European Central Bank (ECB) has put an end to the escalation of interest rates and, according to the Bloomberg indicator, the markets discount that it will make seven reductions of 25 basis points until leaving the rate at 2 .75% by the end of the year, from the current 4.5%.
The Euribor, the indicator to which most mortgages in Spain are referenced, has been anticipating the inflection for weeks and could lower the annual bill for a standard mortgage by around 1,600 euros if its price corrects to the intensity expected for the price of money. of the eurozone.
The first relief will be felt by the amortization installments that have their price linked to the December reference and are reviewed semiannually because the Euribor closes the month at 3.679%, lower than the 4.007% of last June, but still above the 3.018% marked in December 2022. For operations with annual review, the correction will still take time to arrive because it is necessary to go back to last spring to find a lower rate (in March it stood at 3.647%) and the correction will be progressive as has been the increase in prices. , as the indicator reflected rate increases.
Euribor, at 3.679%
To carry out the calculations, the average loan estimated by the National Institute of Statistics (INE) of 143,186 euros in September is taken as a basis, with a 23-year contract term and taking as a basis a differential of 0.75% over the Euribor to set the price – operations usually apply a spread of 0.5-1% -. The calculation is made on the 4.022% that the Euribor marked in November since in December it anticipates the future movements of the ECB and has given up positions.
The intensity of the reduction depends on the age of the operation, given that the bulk of the interest repayment accumulates in the first years, and the term of the operation.
The simulation would be applicable, precisely, to almost newly contracted loans where the sensitivity of the installment is maximum to movements. The savings would thus range between 154.2 euros per year and 616.8 in mortgages of between 100,000 and 400,000 euros contracted for 15 years for every 25 points that the Euribor drops and would reach 171.6 and 686.4 euros in terms of 30 years. If the Euribor fell by the 1.75 percentage points that the market predicts in rate cuts, mortgaged citizens would save in the latter case between 1,202.16 and 4,808.76 euros per year for loans with between 100,000 and 400,000 euros of outstanding debt. repayment and for a period of 30 years. The translation, in any case, will be progressive and it will take a year to fully capture a movement in rates once they are completely stabilised.
The vertical rise in rates has dramatically reduced demand – new concessions plummet at a rate of 15% over the year – and it is expected that 2024 will turn the situation around. The entities have, in fact, begun to adjust their catalog prices and have been intensively offering much lower prices for weeks in direct negotiation with clients or through intermediaries or mortgage brokers. The Government’s decision to help alleviate the bill with the elimination of commissions associated with changes from variable to fixed loans and now also to mixed ones is likely to encourage subrogations and fuel activity.
The unknown is bank deposits. The forecast of lower rates removes pressure to raise the remuneration for savings in these impositions and some entities have begun to adjust their offers, although a surge in credit demand would give arguments to pay for savings to raise the funds to be lent. To capture fresh money from families, banks paid 2.43% in October and 3.45% to companies, although very targeted at clients with a better profile or more ties.
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