2023-08-08 10:31:45
Those who wondered about the Euribor forecasts and when both this index and interest rates will drop have recently obtained the umpteenth response from the European Central Bank.
On July 27, the ECB again bet on a rate hike, this time of 0.25%: it is the ninth rise in 12 months and leaves the price of money at 4.25%, its highest level since 2001, more than two decades ago.
From there, there is not much certainty: after the August hiatus, the ECB will decide in September if it has been the last rise or if there are still more rounds ahead. What happens with inflation and the economy will influence the decision, which in turn could affect financial stability, credit, the Euribor and mortgages.
What is the Euribor, how is it calculated and how does it affect you?
The Euribor (acronym for Euro InterBank Offered Rate: European Interbank Offer Type, in Spanish) is the interest rate at which credit institutions in the euro zone buy and sell money among themselves.
In other words, it is the average interest at which the vast majority of European banks grant short-term loans to, in turn, send that money to both companies and individuals.
The Euribor, which began to be used in 1999, is the index to which most mortgages in Spain are referenced, as well as one of the most important rates today, and is calculated and published based on the EMMI (The European Money Markets Institute, international non-profit organization).
In addition, it has different defined validity periods: one week, one month, three months, six months and one year. The latter, the 12-month Euribor, is the most widely used official reference rate for mortgage loans in Spain, hence the Close relationship of the Euribor with Spanish mortgages and the importance of knowing the Euribor forecast for the end of 2023 and the coming years.
Euribor forecast for 2023, 2024 and 2025
What, then, is the Euribor forecast? Experts, banks and organizations write down and update their Euribor forecasts for 2023 and the coming years close, usually not going beyond 2024 or 2025.
In contrast, consider how the Euribor is today (at 4.081% at 12 months on Wednesday, August 2: latest data published at the time of writing this article) is only of relative importance, since for the mortgage review calculation what is taken into account is the average Euribor of the previous month, not the daily Euribor.
In relation to these latest data, the Euribor closed July at 4.149% on average, after reaching its monthly minimum on the 31st (4.064% at 12 months), but with expectations that the increases will continue in the following months, according to the experts.
Regarding the Euribor forecast for the end of this 2023 and for the coming years, this varies depending on who makes the estimates.
Thus, at the end of June the European Central Bank already suggested the possibility that only from 2025 the Euribor and interest rates would begin to fall: according to their projections macroeconomics, the 3-month Euribor would end up at 3.4% on average for both 2023 and 2024, and it would only start to drop somewhat (up to 2.9%) in 2025.
Although it is the data for 3 months and not for 12 —the latter shows greater sensitivity—, it is to be expected that both will share a similar fate, he pointed out then Expansion.
“Uncertainty about transmission [de la política monetaria] it stems from the fact that the euro area has not gone through a sustained phase of rate hikes since the mid-2000s and has never seen rates rise so rapidly. And this raises the question of how quickly and strongly monetary policy will be transmitted to businesses – through interest-sensitive spending – and to households, through mortgage payments,” said Christine Lagarde, ECB President, the June 27, before the last rate hike.
From Future Finances point out that an estimate could be inferred from the ECB 12-month Euribor forecast If 0.75% is added to these three-month term (0.75% is the average of the differences from 2022 to 2023 between one and the other, they calculate), so they would look like this:
4.15% in 2023 4.15% in 2024 3.65% in 2025
Fever to get rid of the mortgage as soon as possible: this graph shows that more loans are already canceled than signed
The analysis department bankinter It is also studying the Euribor forecast for 2023, 2024 and 2025 and “anticipates that the 12-month Euribor will moderate in the coming years.”
According to estimates of the entity, the most used index for calculating mortgages would be around 4.10% in December 2023and then go down to 3.70% in 2024 y al 3.20% in 2025.
Regarding the 3-month Euribor, the bank’s projection places it at 3.70%, 3.20% and 2.70%, respectively.
Besides, the forecasts of funcas They point out that “the one-year Euribor would exceed 4% at the end of 2023 (a threshold that was not reached in the previous panel), to subsequently fall to around 3.5% at the end of 2024”.
in his last panel of forecasts of the Spanish economy, of July 2023, this think tank (the analysis center) predicts that the one-year Euribor closes 2023 with 4.03% in the fourth quarter, to go down in 2024 at 3.90% (first quarter), 3.70% (second quarter), 3.52% (third quarter) and at 3,33% in the fourth quarter and end of 2024.
Finally, CaixaBank Research It is another of the entities that shares its forecast on the Euribor in 2023 and next year.
In its report month of July, publishes its estimates for the different terms of the index. The 12-month Euribor would close this 2023 at 3.86%while would drop to 2.80% in 2024. As for the 3-month Euribor, its forecast is 3.57% for this year and 2.69% for the next.
#Euribor #forecast #coming #years