BarcelonaFamilies who have a variable-rate mortgage experienced a real crossroads during the years 2022 and 2023, but they are seeing this 2024 how macroeconomic movements bring them month after month good news for their pockets. The Euribor, the index to which most variable interest loans are referenced, fell again this November and made the fees paid by families and companies a little cheaper. Specifically, in the eleventh month of the year, it stood at 2.51%, from 2.7% in October.
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This drop can mean an automatic benefit in the families’ quotas. A family that has a standard mortgage (standard loans are considered those with a capital of 200,000 euros with a term of 30 years) and that renews its loan this December with the November indicator will experience a significant saving in what it pays to bank: in November 2023 the indicator was at 4%, close to its maximum levels in recent years and therefore the fall is 1.5 percentage points. The reduction is not minor: in the aforementioned mortgages that are updated annually, this is equivalent to around 150 euros less in the monthly fee, that is to say, around 1,800 euros in the annual fee.
In the case of variable mortgages that are recalculated semiannually, not annually, the savings are also notable. In this case, the indicator will have to be contrasted with that of May, when it touched 3.7%. This is about 120 euros per month, which would be equivalent to a reduction of about 720 euros in a semester. It must be stressed, however, that these calculations are made with loans of 200,000 euros and with a term of 30 years.
Existing calculations in the sector indicate that in Spain there are approximately four million families with variable rate mortgages, which are the ones that will benefit from these rate cuts at the start of the school year. Another million families have fixed-rate mortgages, in which the fee does not change with the rise and fall of the price of money.
The Euribor reached its ceiling in October last year, when it stood at 4.16%, culminating in a historic escalation. In the wake of Russia’s invasion of Ukraine in 2022, inflation skyrocketed globally and central banks everywhere raised the price of money as a formula to reduce consumption and investment and try to slow price escalation . From December 2021 to December 2022, the Euribor, which is directly related to interest rates, went from -0.5 to 3%, a historic rise due to its forcefulness. This involved increases in the rates of mortgages and variable loans to both families and companies, which have seen the indicator shrink again in the last year. A family that then renewed their loan with the aforementioned conditions saw their fee suddenly rise by 350 euros a month, the equivalent of 4,200 euros a year.
The outlook is still good for mortgage holders as the European Central Bank is expected to cut rates again before the end of the year after having done so in June, September and most recently this Octoberand this will continue to be reflected in the drop in Euribor. In some financial circles, there is even speculation that the ECB could place the price of money at 1% in 2025, when currently, after three reductions, it is at 3.25%.