In November 2023, Euribor recorded 4.022%, its lowest monthly average since June of the same year. This is the second decline of the year after the decline in August, but the most significant in the last eleven years, especially since August 2012. Subsequently, the benchmark index for variable mortgages fell 0.184 percentage points (to 0.877%, from 1.061% in July). the following month) and now the decline is 0.138 points: from 4.160% in October to 4.022% now.
Simone Colombelli, Mortgage Director at mortgage comparator and advisor iAhorro, prefers to be cautious when analyzing this situation: “This is a striking trend, but we should not get carried away. This is good news, especially for those with mortgages, but it is too early to say that Euribor will not rise again Actually it probably is and What we will see in the coming months “This indicator can have both upward and downward variations.”
Similarly, Colombelli adds: “With the return of summer, the trend has changed and we are gradually returning to a certain level of stability on the Euribor. The data also shows this: Month-to-month variations are around one tenth.” This was partly due to the stabilization of official interest rates set by the European Central Bank (ECB).
Could the year end with Euribor below 4 percent?
A few months ago, it was almost impossible to think that Euribor would close 2023 below 4 percent. Moreover, all predictions showed that it would reach 4.5% in December 2023. However, with the change in trend we experienced this month, “this is unlikely, but there is a small chance that Euribor will end the year in 2023.” “The rate is as high as 3%, close to 4% but below that,” says the manager iAhorro Mortgages“It would be a wonderful gift from the Three Kings for those with mortgages,” he adds.
One of the factors that caused Euribor to stabilize was the ECB’s halting of official interest rate increases at its last meeting. Currently these official rates stand at 4.5%. The last increase of 0.25 points was adopted by the European body in September and for now everything indicates that there will be no further increases until at least 2024, but this will depend on the trend that inflation will follow. This rate, which was 2.9% in October, was very close to the 2% target. The body’s next and final meeting of the year, chaired by Christine Lagarde, will take place on 14 December.
If we look at the historical evolution of Euribor in addition to interest rates, “the data may be telling us that we have already reached the peak of this growth phase,” Colombelli says. The highest number recorded this year This indicator is for OctoberAt 4,160%, it was the highest monthly average value recorded since November 2008.
Of course, iAhorro’s spokesman believes that, unlike what happened in other moments of increase, this time “the decline will not be so vertical, instead we will gradually move further and there will be a longer period of stability” compared to, for example, 2008 or 2000, when the highest values were recorded.”
Wages continue to rise, though less than in 2022
Variable rate mortgages are normally reviewed quarterly, semi-annually or annually. Those who have to do an annual review of their mortgage this November will still see increases in their payments, but they’re much smaller than those recorded at the same time last year.
Specifically, those who took out a variable mortgage of €150,000 for 30 years and with a difference of 0.99% in 2021, when Euribor was negative, paid an initial payment of €448.98 per month. However, when the annual review was conducted in October 2022, the indicator was 2.828%, while this quota increased to: 691.35 euros and now Euribor is at 4.022%you will see how it continues to rise: up to 790.21 euros you will pay every month after the 2023 review. Thus, the wage will now increase by 98.85 euros every month, but the total increase in the last two years exceeds 340 euros per month.
If the variable mortgage amount was larger, the increases would also be larger. For example, if the loan amount was 300,000 euros with the conditions mentioned above, your monthly payment would increase by more than 680 euros in total in just two years: from the 897.96 euros you paid in 2021 to 1,580.41 euros. You will pay from now on.