2023-12-12 01:21:53
Tuesday, December 12, 2023, 00:21
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Eurozone prices are moderating and, with them, the Euribor. Good news for mortgage debtors who have contracted a variable rate loan. According to Gonzalo Bernardos, “those who renew their mortgage interest rates in February will pay less for the first time in a long time if the one-year Euribor continues to be below 3.8% as it is at the moment.”
The professor of Economics at the University of Barcelona made this prediction last week during one of his usual interventions in the ‘Better late’ program on La Sexta. “That news you are waiting for is about to arrive,” he announced enigmatically, and then clarified that the savings that borrowers will obtain “will be minimal.”
The Euribor is the interest rate applied to loans in euros between large banks, and which is used as a reference for variable rate mortgages. This type of loan has a compound interest rate, which consists of a reference index (normally the Euribor) plus a differential (percentage) that is always the same.
The Euribor fluctuates daily, although the percentage used in variable mortgages is the monthly average of the indicator over a period of time, normally six or twelve months. Thus, at the end of the corresponding established period, what borrowers have to pay in their monthly installment is updated.
To calculate the new installment, the mortgage Euribor published by the Bank of Spain is usually used. The month used as a reference can be the month before the review, but also the month two or three months before. Everything will depend on the banking entity with which the loan has been signed.
The contract between the financial institution and the borrower must include the date set for the start of the amortization process and, therefore, the subsequent review dates. That day may be the day the loan was signed, or the first of the following calendar month.
What counts to calculate the fee
In any case, to calculate the new installment, several factors are taken into account: the value of the reference index (normally the Euribor), the differential that is added (a fixed percentage), the capital of the outstanding loan, and the time remaining. to finalize payments.
In December, for the first time in a long time, the indicator fell below 4%. Except for day 1, when it was set at 3.902%, the Euribor is below 3.8% on the rest of the days of this month.
At HelpMyCash they believe that, although the variable mortgages that are reviewed in the coming weeks will still become more expensive, “it is likely that clients with a semi-annual review in December or January of next year will already begin to pay cheaper installments. “Yes, the prices of loans that are updated next year will become cheaper.”
In any case, the evolution of the Euribor will depend on that of inflation in the eurozone. If prices continue to moderate as before, the European Central Bank (ECB) will not have to raise interest rates. What’s more, they could even lower them at some point next year, which would pave the way a little more for mortgage debtors.
The financial comparator’s experts estimate that this year the Euribor will end “around 4%, up or down, and that it will move between 3.75% and 4% throughout the first half of 2024.”
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