Good news for those who pay a mortgage: the Euribor fell by 3% in September

The Euribor, the reference index for most variable rate mortgages in Spain, has closed in September 2024 at 2.936%, which marks a notable reduction compared to previous months and offers relief for holders of these types of loans. This figure represents a significant decline, since in March 2024 it reached 3.718% and in September 2023 it was at 4.149%. This downward trend represents a relief for many families who have been affected by the increase in their mortgage payments in recent years.

The reduction in the Euribor means substantial economic relief for those who have a variable rate mortgage. This type of loan is reviewed from time to time, and with the new Euribor rate at 2.936%, many mortgages will be significantly cheaper. According to estimates, the variable mortgages reviewed during this month will receive an average saving of more than 1,200 euros per year.

For example, for a mortgage of 150,000 euros for 25 years, with an interest rate of Euribor + 1% and an annual review, the monthly payment has gone from 890 euros to 786 euros, which represents a saving monthly of 104 euros. These savings can be vital for many families who have been experiencing increased payments due to high interest rates in recent years.

The difference to previous months is obvious. In March 2024, the Euribor reached 3.718%, and a year before, in September 2023, it had reached a worrying level of 4.149%, one of the highest levels in the last decade. During this time, the increase in mortgage payments caused problems for many households, especially in the context of inflation and higher living costs. However, the current downward trend is providing relief that could consolidate in the coming months.

The policy of the European Central Bank is crucial

The main reason behind this reduction in Euribor is the policy of the European Central Bank, which decided in September to reduce its interest rates by 0.25 percent. This step was taken to support the economic growth of the euro area in a context of controlled inflation. Over the past few years, the ECB has been adjusting its monetary policies to deal with the inflationary crisis that followed the pandemic and the conflict in Ukraine, which created a series of global economic pressures.

Although the Euribor has shown a downward trend, there is uncertainty about the evolution in the last months of the year. Analysts estimate that it could be between 2.50% and 2.75% by the end of 2024, depending on the ECB’s decisions at its next meetings, scheduled for October and December. These meetings will be very important in determining whether the ECB continues its policy of interest rate cuts, which could contribute to greater relief on variable mortgages.

However, the possibility of stabilization or even a slight rebound is not ruled out if inflation in the euro area is not kept under control, which could affect the monetary policy of the ECB. This uncertainty means that variable mortgage holders need to be alert to changes in Euribor in order to better plan their finances.

The reduction in Euribor is not only a benefit to those who have variable mortgages, but also to those who are considering getting a new loan. Banks are responding to this evolution by changing their interest rate offer, both on variable rate mortgages and on fixed and mixed rate mortgages.

Groups such as MyInvestor, EVO Banco, Bankinter, COINC, Santander, and Ibercaja have already started to reduce the interest they offer on their mortgage products. In this context, variable rate mortgage loans will be more attractive to new customers, and banks will continue to vary fixed and mixed rate mortgages to maintain competitiveness in the market.

Although variable rate mortgages may be more attractive in this context of falling Euribor, fixed rate mortgages are still very popular, especially among those looking for long-term stability. In recent years, many preferred the fixed rate due to uncertainty about the behavior of the Euribor. However, with their decline, we are likely to see more interest in variable mortgages.

Alternatively, mixed mortgages, which combine an initial period of fixed rate and then conversion to Euribor, could also become popular, especially among those seeking security in the first years of the loan but is willing to take some risk in the loan. Long term.