Alex Trelinski
VARIBALE rate mortgage holders in Spain are set for savings as the Euribor rate closed July with its lowest level in 18 months.
The Euribor is used as the data indicator for mortgage rates and July saw hit an average of 3.526%- the biggest year-on-year fall since June 2013.
Last month’s average figure stood at 3.65%.
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The lower figure will mean variable rate mortgages should fall by an average of €777 per annum.
That’s based on a €140,451 mortgage being repaid over 23 years according to data produced last year from the National Institute of Statistics.
On a one-year single percentage drop, it means a €64.80 per month saving.
In July 2023, the average Euribor rate was much higher, at 4.149%, and that big difference is good news for mortgage holders.
Analysts predict that the good news will continue.
“There will be a clear trend of almost continuous decline until official rates stabilise at around 2% within two or three years,” said Leopoldo Torralba, an economist at Arcano.
The Euribor news comes after the European Central Bank’s 0.25% cut in interest rates in June, with a further cut possible this autumn so along as it is satisfied that inflation is being kept under control.
The lower Euribor rate means more money available for mortgage holders for spending, savings, or investments, therefore boosting the economy.
It also suggests that new mortgages will be taken out as first-time buyers find it more affordable to enter the property market, though that could also mean the trend of rising prices will be maintained.
Another factor for new buyers is whether based on current trends of the falling Euribor, they should opt for a fixed or a variable mortgage.
Leopoldo Torralba said: “As the Euribor falls below 3%, there will clearly be a bigger incentive towards taking out variable mortgages, but that is still several quarters away.”
In May, 44.6% of home mortgages ere constituted at a variable rate and 55.4% at a fixed rate, with an average interest rate of 3.25%
