It presents the Euribor, the index to which most variable mortgages refer this Monday, November 25, 2024 a new annual low of 2.416%, thus remaining below the 2.5% barrier in its daily rate, already threatening to close the month below that same barrier, which has not happened since September 2022.
For the entire month of November the Euribor showed a clear downward trend, which was consolidated with a total of eight consecutive days of declines, accumulating 0.21 basis points of discount for the mortgage index. Now, in the latter part of the month, it has increased slightly on several days, but the average remains the same.
In fact, 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, precisely with the beginning of the climb that marked historic highs.
As regards this Monday’s data, the Euribor cuts 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 surpass 2.5 on the downside. So much so that, leaving the Euribor at a daily average of 2.4% in the remaining days until the closing, the monthly average would close with a value of 2.49%, so it would be enough to break that barrier.
How long will the Euribor decline continue?
2024 is coming to an end, so our gaze is already turned to 2025, when many will wonder what will happen to the mortgage index and installments to be paid. For the moment, continued 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 compared to recent months, at least until June 2025.
In fact, these continuous drops in the daily rate and the per-session cut discounted by the ECB lower the forecasts of the analysis houses. For now Funcas, which gathers in its panel of economic forecasts the opinion of 19 of the most prestigious economic companies in the country, including banking or university research services, gathers consensus on how the Euribor will evolve in the coming quarters. For the second quarter of 2025 it is aiming for an average of 2.46%, while it has already lowered its forecasts for the end of the year and In the fourth quarter we are already aiming for an average of 2.35%.
But what do the people themselves say? Euribor futures? The Euribor is prepared with the interbank loans that the large European financial institutions grant to each other, but, at the same time, it is also quoted on the financial markets, through financial futures. The most common is three-month and its contracts are generally interpreted as a good indicator of what Euribor investors expect. While last week they were included in the 2.06%the new data goes further and places the December 2025 contract in the 1.93%.
How does it affect my mortgage?
This is the downward trend that Euribor is experiencing directly affects mortgage reviewsboth semi-annually and annually, since the banks recalculate the variable mortgages with the monthly average, increasing or decreasing compared to the data from six or twelve months ago.
To see it with an example, for a 140,000 euro mortgage with a duration of 30 years (360 months), with a differential of 1% and taking the month of November 2023 as a reference (since most mortgages are reviewed for 12 months), when the Euribor closed at 4.022%, The monthly fee was 753.43 euros.
Now, with the provisional average for November 2024 sitting at 2.52%, the mortgage payment of homeowners who have a review in September will drop to 601.02which means that They will pay 152.41 euros less than a year ago and we will begin to notice the first drops in the monthly installments of mortgagees.
How is Euribor calculated?
Euribor is called the European Interbank Offered Rate and is calculated through a panel of European banks that report every day at which rate interbank loans are disbursed. From 2020 the calculations are carried out in a hybrid manner. Panel data are included, but also the market estimates themselves, with the aim of reducing volatility and the risk of manipulation, 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 or Unicredit.
The average interest rate at which financial institutions lend capital to each other is published every working day at eleven in the morning. one week, one month, three months, six months and 12 months.
What are the implications of the Euribor’s decline on new mortgage applications?
Interview Between Time.news Editor and Mortgage Expert
Time.news Editor: Welcome, [Expert’s Name]. Thank you for joining us today to discuss the recent developments in the Euribor and what they mean for homeowners and potential buyers.
Expert: Thank you for having me! I’m excited to discuss this important topic.
Time.news Editor: Let’s dive right in. As of November 25, 2024, the Euribor has hit a new annual low of 2.416%. This marks a significant milestone, doesn’t it?
Expert: Absolutely! This is noteworthy because it’s the lowest we’ve seen the Euribor since September 2022. The fact that it’s dipping below the 2.5% barrier again is a relief for many mortgage holders.
Time.news Editor: It seems like the trend for November has been primarily downward, with eight consecutive days of declines. How likely do you think it is for this trend to continue, perhaps even closing the month below 2.5%?
Expert: Based on the current trajectory, it is indeed plausible for the Euribor to close below 2.5% this month. The provisional average for November is currently 2.52%. If we see a few more days where the daily average stays around 2.4%, we could see that happen, which would be significant for variable mortgage holders.
Time.news Editor: Speaking of mortgage holders, how does this decline in the Euribor affect them, particularly with reviews of their variable-rate mortgages?
Expert: The impact is quite direct. Lenders recalculate variable mortgage rates using the Euribor’s monthly average. As the Euribor drops, so do the mortgage payments for homeowners whose rates are tied to this index. This could provide substantial financial relief, especially for those who have been feeling the strain of higher payments in recent years.
Time.news Editor: That’s certainly good news for existing homeowners. Looking ahead, what are the expert predictions for the Euribor in 2025?
Expert: The consensus among economists is that the downward trend in the Euribor may continue at least until mid-2025. Some forecasts, like those from Funcas, suggest values around 2.46% in Q2 2025 and potentially even lower, averaging 2.35% by the fourth quarter.
Time.news Editor: Interesting! And what can you tell us about Euribor futures? How do they factor into the expectations for the index?
Expert: Euribor futures can provide insights into what market participants expect for future Euribor rates. Currently, we’re seeing futures reflecting a rate of around 1.93% for December 2025, which indicates that many are anticipating a further decrease. This kind of context is often invaluable for both borrowers and investors.
Time.news Editor: With inflation being a significant concern for many central banks, do you believe this will influence the Euribor’s trajectory?
Expert: Yes, the policy decisions of the European Central Bank—especially cuts or rises in interest rates—are intertwined with inflationary pressures. If inflation continues to moderate, central banks might feel more comfortable with further cuts, thereby supporting the decline in the Euribor. However, it’s always a balancing act.
Time.news Editor: As we wrap up, what advice would you give to homeowners or potential buyers keeping an eye on the Euribor?
Expert: My advice would be to stay informed and consider taking action if they have a variable-rate mortgage. Refinancing to lock in current lower rates might be a smart move for some. Additionally, potential homebuyers should leverage the current low rates to secure favorable loan terms, while also planning for any potential shifts in the market by 2025.
Time.news Editor: Thank you, [Expert’s Name], for sharing your insights today. This conversation sheds light on a critical aspect of personal finance that affects so many.
Expert: Thank you for having me! It’s been a pleasure discussing this topic with you.