Alex Trelinski
NEXT monthâs anticipated interest cut by the European Central Bank is contributing to significant falls in the Euribor- the main benchmark index for mortgages in Spain.
Augustâs Euribor rate is almost a percentage point down on a year ago, standing so far this month at 3.18% compared to 4.073%.
Last September, it peaked with a monthly average of 4.149%.
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The falling Euribor is good news for variable mortgage holders that have repayments reviewed either annually or bi-annually.
For example, a loan of âŹ150,000 over 25 years would fall âŹ40 per month to a new figure of âŹ933.
The amount of savings to be made will depend on the year the mortgage was signed and how much of the loan has been repaid.
Experts believe the downward trend in the Euribor rate will continue for the rest of the year as European Central Bank (ECB) is expected to make perhaps two interest rate cuts in the next four months, on the back of a 0.25% reduction in June.
Business tech firm, Ebury said that âthe Euribor will most likely continue to fall in the coming weeks, due to the expected rate cut by the ECB at its meeting on September 12â.
âWe expect the central bank to cut rates twice (in September and December), and we maintain our earlier forecast that the Euribor will be around 3% to 3.5% by the end of 2024.â
Ebury also believes that a âmortgage warâ to entice customers will gather pace during the last quarter of the year.
According to the latest figures from the Bank of Spain looking at June, the average interest rate on new mortgages (measured by the APR figure) is now at 3.507%- the lowest since the start of 2023 and significantly lower than the 4.10% mark reached last September.
