In May, Euribor stood at 3.86 percent, missing data by just one day and marking a modest rise of about one tenth from April, when the indicator closed at 3.757 percent. This suggests the market may be entering a stabilization phase for the European benchmark used by the majority of variable-rate mortgages aimed at households and businesses in Europe and beyond.
The Euribor curve shows a gentle uptick. This trend is something recent months have witnessed, and it could persist for a while, according to the Mortgages division of iAhorro. Simone Colombelli, who leads that unit, notes the curve has moved gradually upward without abrupt shifts.
Since February 2023, when Euribor stood at 3.543 percent, the index has risen modestly by about three tenths of a percentage point in the ensuing four months. For current variable-rate borrowers, this is a notable but manageable rise, and for applicants considering a variable-rate loan, it suggests continued attention to how rates evolve. The effect of these revisions tends to be gradual, with each update slightly smaller than the previous one for many borrowers.
For example, iAhorro explains that someone with a 30-year variable mortgage bearing a Euribor plus a 0.99 percent margin would see an increase of approximately 279.72 euros per month at their annual review this month. Previous monthly payments were around 501.78 euros, rising to about 781.50 euros. This translates to roughly 3,356.66 euros more per year in mortgage costs. Had the review occurred in April, the increase would have been slightly higher, given that Euribor data then stood at 3.757 percent, with a monthly payment of about 288.99 euros and annual costs of around 3,467.84 euros. [Source: iAhorro]
The difference between Euribor values for May 2022 and May 2023 is about two-tenths of a percentage point, while the gap between April 2022 and April 2023 is roughly the same, underscoring how the annual comparison can shape expectations for monthly quotas.
When could Euribor hit 4 percent?
Most forecasts from experts point to a move to 4 percent around June. If the rate does not rise on its own, it might be driven by new signals from the European Central Bank, which would influence expectations for the rest of the month. The head of iAhorro Mortgages notes that a mid-month ECB decision on rates could push Euribor higher, albeit temporarily, before a potential stabilization in subsequent weeks.
June 15 is anticipated for an ECB policy announcement, with the current official rate at 3.75 percent. The central bank may hike by 0.25 percentage points again, or it could hold steady to assess incoming data. A further move would depend on evolving economic indicators and inflation trends. Regardless of the short-term actions, the goal remains to avoid excessive gains that could harm borrowers and financial stability.
If a 0.25 point increase occurs, the horizon could see rates near 4 percent. According to iAhorro’s outlook, Euribor might stabilize close to that level once reached, rather than continuing to climb, unless new shocks emerge in the market. This implies future rate movements could be modest and predictable for many borrowers, especially those reviewing within the year.
Which mortgage is better to contract now?
In recent months, the mixed mortgage market has strengthened, with several banks reducing fixed-rate tranches, typically around 2.10 to 2.5 percent. In the variable space, Colombelli of iAhorro observes that fixed-rate products offer improved terms for some profiles, while the variable option remains vulnerable to Euribor fluctuations. He notes that the advantage of a variable loan can narrow if the base rate is higher than the margin, suggesting careful comparison between rate components and total cost.
On fixed-rate mortgages, iAhorro reports that some lenders are presenting fixed terms closer to 3 percent for the best-qualified borrowers. However, a few institutions still offer lower quotes, emphasizing the importance of personal financial health and long-term plans when choosing a loan type. [Source: iAhorro]