The mortgage market is starting to stabilize after months of uncontrolled increases with mortgages skyrocketing up to 300 euros in some loans.
The Euribor, the key variable mortgage index, has seen a notable change in trend, with a significant drop in December. After a year of almost constant increases, the index broke through the 4% barrier, reached in June, settling at an unexpected 3.688%, the lowest level since March.
This decline, the most pronounced in eleven years, has a direct impact on variable mortgage holders who will see reductions in their monthly payments. Those who have the semi-annual review will have relief, with savings of between 30 and 60 euros, depending on the amount of the mortgage.
Evolution of the Euribor 2022-2023
Experts such as Simone Colombelli, director of Mortgages at iAhorro, urge caution: “we need to be cautious and not exaggerate too quickly because it is very likely that the Euribor will remain around 3% for many months before continuing to fall”. . While the sudden drop caught many by surprise, the long-term perspective suggests that stability around 3.5-3.7% is the most logical.
Immediate impact
The decrease in Euribor has an immediate impact on the compensation of those who carry out the semi-annual audit. A specific example is that of a 150,000 euro mortgage for 30 years which will undergo a reduction of almost 30 euros per month.
Monthly fee
For those who do annual reviews, the situation is different, as fees will continue to increase, albeit at a more moderate pace. Despite this, it is expected that, if the trend of the Euribor were to continue, the reductions in the quotas could be more evident in June 2024.
Fixed and mixed
The drop in the Euribor increases the possibility that banks will adjust the rates on other types of mortgages, such as fixed and mixed ones. This will largely depend on the decisions of the European Central Bank (ECB) regarding official interest rates.
Colombelli points out that, “although a decrease in fixed mortgages is expected, banks’ funding percentages could remain more conservative in 2024. The reduction in funding could especially affect future mortgage holders in large cities who have not saved enough.” percentage of the house price.”
The reduction in financing could especially affect future mortgage holders in large cities who have not saved enough Simone Colombelli Mortgage Director iAhorro
As for the future of the Euribor, its decline is expected to continue, although expectations of a negative rate are frowned upon, as they would indicate an economic crisis. The hope is to keep the Euribor around 2%, a balance that encourages saving and facilitates borrowing.
Future
The surprising drop in Euribor opens the door to significant changes for variable mortgages, although caution is advised in the face of possible future adjustments and external factors that could influence the economy and the mortgage market.
The market is pricing in up to six rate cuts in 2024 by the BCEXTB
From XTB Manuel Pinto underlines that “the market is discounting up to six rate cuts in 2024 by the ECB, which should be in line with the evolution of the Euribor. This could be of great help for those with variable rate mortgages, who could see how anyone from February, if everything continued with the current trend, could refinance their mortgage at more convenient rates.
At least, 2023 ends with some relief for variable mortgages that bore the brunt of the rising price of money in 2022. The future is the 2% Euribor and some economic stability in the social uncertainty we live in .
2023-12-30 03:30:00
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