Good news for mortgage holders

The Euribor August will close at 3.17%which represents a decrease of 10% compared to July (3,526%). This would be the largest monthly decrease in the past 15 years.

At HelpMyCash.com They believe that this downward trend could continue, and that the Euribor could end the year between 3% and 3.25%. “even We do not maintain that it could be lower than 3%“explains the analyst Miquel Riera.

For those who have annual review in your mortgage, taking for example an average mortgage of 150,000 euros for 25 years, with an interest of Euribor plus 1%, this drop would translate into a savings of around 930 euros per year (around 77 euros per month). Those who have semi-annual review you see a a reduction of about 42 euros per monthwhich adds almost 255 euros in six months.

Variable mortgages with semi-annual review whose interest is updated with the August Euribor will also be cheaper, but less, because this index was trading at 3.671% six months ago.

In this case, according to HelpMyCash calculations, the fees will drop from an average of about 848 euros to an average of about 806 euros: about 42 euros less per month and almost 255 euros less per semester. It must be remembered, however, that the reduction in the portion may be different depending on the amount still to be paid ​​​​​​​​​​​​​​and the term of the revised mortgage loan, as well as the interest and the years which has passed since it was contracted.

The sudden fall in the Euribor, according to the mortgage analyst HelpMyCash, is due to the fact that markets expect the European Central Bank to reduce its rates several times in the coming months. “As the main banking groups on our continent take these cuts for granted, they have proceeded to reduce the interest they charge on interbank loans they have, that is the one that is used to calculate the value of the Euribor,” says Riera. “This explains why this index has fallen over the last month,” the expert concluded.

¿Y How will this index end the year?? The main interest rate of the European Central Bank, today, is 4.25%. Therefore, according to Miquel Riera, “if the banking expectations are met and the ECB cuts its rates several times in the coming months, the Euribor is likely to end in 2024 about 3%although at HelpMyCash we don’t believe it could be even lower than that value. “

Now, too it is possible that these forecasts will not be met and that the European Central Bank will reduce its rates only once in the rest of the year. It would be a situation similar to the one at the end of 2023: At that time, the Euribor also fell due to expectations of interest cuts that did not happen in the end, which caused this index to rise slightly again and without stopping in the first months of 2024.

“And yes the most desperate situation“, explained Riera,” at HelpMyCash we believe that the Euribor will follow a similar trend to the beginning of 2024 and that it will close the year with an average value of around 3.25%“. In any case, the analyst is sure that those with variable rate mortgages will win anywaysince the value of the index will still be lower than it was a year or a half ago and, therefore, its quotas will also decrease if they are reviewed in the coming months.