July 27, 2022 marked the beginning of a challenging period for European mortgage holders, when the European Central Bank (ECB) decided to increase interest rates from 0% to 0.5%. This was the first step in a series of increases that raised interest rates to 4.5% in just over a year. This situation triggered a rise in the Euribor, bringing it close to 5%, causing economic difficulties for millions of families with debts.
However, this upward trend was reversed on June 12, when the entity led by Christine Lagarde decided to reduce interest rates by 25 basis points, leaving them at 4.25%. This move was welcomed by the markets as the beginning of a possible sequence of reductions that could extend throughout this year and the next.
With this outlook, it is logical to think that the Euribor could drop below 3% and approach its historical average, which is slightly below 2%. However, Euribor.com.es is cautious about this possibility. “Currently, we have the Euribor around 3.5% and interest rates at 4.25%, so it is already trading at a significant discount based on expectations of two rate cuts remaining this year, something that the ECB has not yet confirmed. At the last monetary policy meeting, held on July 18, the ECB decided to maintain interest rates. The next meeting of the European Central Bank will be held on September 12 in Frankfurt and, depending on the economic data at that time, they could cut rates again,” indicate from Euribor.com.es.
Carlos L贸pez from Euribor.com.es is not very hopeful about the possibility of seeing the Euribor below 3% this year. “The ECB does not want to repeat past mistakes that generated the largest inflationary period in decades. Since their mission is to control prices, their decisions will be very measured and based on available data. Therefore, it will take quite some time to see the Euribor below 3%, probably we will have to wait until the first half of 2025,” he said.
For now, what mortgage holders will enjoy this summer is the largest reduction in monthly payments in the last 11 years, as the Euribor will close this month with an average close to 3.545%, compared to 4.494% a year ago. This trend is expected to continue in the coming months.
via: MiMub in Spanish
