The Euribor, standing for Euro Interbank Offered Rate, holds a significant place in the financial realm, impacting millions with its role in determining interest rates on mortgages. As this key indicator has surged to unprecedented levels in recent years due to global economic shifts, the pressing question on everyone’s mind is: When will the Euribor go down? In this analysis, we delve into forecasts, opinions, and expert perspectives to unravel the mysteries surrounding the future trajectory of this influential financial benchmark.
The Euribor Surge in 2022 and 2023: Reasons Unveiled
The surge in Euribor is intricately linked to the monetary policy decisions of central banks and their influence on mortgages. Recent months have witnessed a notable increase in Euribor, profoundly impacting variable mortgages.
The pandemic, the Russia-Ukraine conflict, and subsequent inflation hikes prompted major central banks, including the European Central Bank (ECB) and the Federal Reserve, to raise interest rates for the first time in 15 years. Consequently, the 12-month Euribor, Spain’s primary mortgage indicator, reached 4% in June 2023 – an unprecedented level in the last 15 years.
Interest Rates in 2023 and 2024: Peering into the Future
Forecasts and communications from major central banks hint at continued interest rate hikes in the latter half of 2023, albeit at a more moderate pace than in 2022. A peak and subsequent decline in 2024 are anticipated as inflation stabilizes and the economy moderates.
The implications for mortgage holders are profound, necessitating close attention to Euribor developments as they may impact credit situations in the short to medium term.
Forecasts from Bankinter Analysis Department: A Glimpse into 2025
latest forecast suggests a downward trajectory in mortgage interest rates from December 2023. Projections indicate values reaching 3% in December 2025. This aligns with broader industry consensus, anticipating a decline in interest rates starting in 2024.
However, the pace of this decline is expected to be gradual, with a potential rebound until December 2023 before the downward trend begins.
Impact on Spanish Mortgages: Navigating Financial Realities
Approximately 75% of Spanish mortgages are signed at variable interest rates, with a vast majority tied to the Euribor. The governor of the Bank of Spain warns that if forecasts hold, the percentage of households with a high net financial burden could rise to 14.7%, posing a structural challenge in private Spanish debt. A one percentage point increase in Euribor could make the average mortgage more expensive by around €500 per year.
Euribor’s Influence on Mortgage Payments
It’s crucial to note that changes in Euribor don’t immediately translate to mortgage payment adjustments. Mortgage interest rates are periodically reviewed, usually semi-annually or annually.
Therefore, any impact from a potential Euribor increase to the level predicted by some forecasts would only reflect in mortgage payments after the next review. The same holds true in the opposite scenario when Euribor begins to decline.
Conclusions: Navigating the Uncertainties Ahead (Euribor)
A substantial decline in Euribor appears unlikely. The current stance of the European Central Bank, coupled with inflation forecasts and the pace of economic recovery, indicates that Euribor will likely persist at elevated levels throughout the year.
However, as with any economic indicator, macro-levels are inherently volatile and subject to various internal and external factors. Geopolitical tensions, inflation rates, central bank decisions, and unexpected events can influence Euribor’s behavior and, consequently, mortgage interest rates. As we navigate the uncertainties, vigilance and adaptability remain key.
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