New relief for borrowers of floating-rate housing loans brings the reduction of the 12-month Euribor to the lowest level of the year.
According to official data, the 12-month Euribor, where most variable-rate mortgages are quoted, fell today to 3.503%. This is the lowest rate since March 27, 2023.
Banking sources told Nautemporiki that this decrease also contributed to the drop in the monthly average for July to 3.570%.
If the trend continues, it will mean significant relief for the pockets of mortgage holders linked to the evolution of Euribor.
“According to some estimates, the monthly payment on a mortgage loan of 150 thousand euros to be paid off over 25 years will be lower by around 65-70 euros, or around 800 euros per year,” the same sources estimate.
It should be noted that in July 2023 the average 12-month Euribor was much higher, standing at 4.149%.
Euribor represents the interest rate at which European banks lend money to each other, with a maturity of 12 months. This index plays a key role in calculating floating mortgage rates in the euro area.
July will be the eighth – and fourth in a row – where those with 12-month mortgages will see their payments reduced.
The index started the year at 3.609% in January, rising to 3.671% in February and 3.718% in March, but fell to 3.703% in April, 3.680% in May and June at 3.65%.
Since the dizzying start of Euribor at the end of 2022, the index has caused a surge in mortgage payments and a serious financial impact on millions of families in Europe.
The ECB’s interest rate cut
In this positive development contributed to the change of direction in the ECB’s monetary policy, although still timid and without a clear calendar, after the first rate reduction in June by 25 basis points.
“The market expects – barring the unexpected – the next reduction in September– which opens the door for Euribor to continue its easing.
In their latest forecasts, Bankinter analysts estimated that Euribor will close the year at 3.5%, falling to 3% in 2025 and recovering to 3.25% in 2026.
Others, however, predict steeper declines: The Funcas Panel — which aggregates forecasts from 20 analysis services — expects the 12-month Euribor to close at 3.3% in 2024 and the Financial Users Association (Asufin) at 3%.
The pace of reductions will depend on inflation developments. Euro area inflation stood at 2.5% in June – a tenth lower than in May but still above the ECB’s 2% target.