Minimum of six weeks. The 12-month Euribor registered a visible daily drop of 4 basis points on Monday to stand at 4.064%, the lowest level in its price since June 19, according to data consulted by ‘La Información’. It is the second consecutive daily decline after trading at 4.111% on Friday from 4.14% on Thursday, data prior to the announcement of the rate hike by the European Central Bank (ECB) from 4% to 4.25%.
The new official ECB rate will take effect this Wednesday, August 2, but the markets are quoting something else: the expectations of a pause in the rate hike cycle for September that President Christine Lagarde put on the table. The Euribor, an acronym for ‘Euro Interbank Offered Rate’ or European interbank rate, measures the interest on loans between large banks in the euro area based on real wholesale financing operations. In turn, this index at 3, 6 and 12 months will act as a reference for financing to companies and households.
Federal (Fed) of the USA in June, after analyzing Thursday’s speech Lagarde, who has reiterated his message about a pause in an interview with the French newspaper ‘Le Figaro’. However, the central bank reiterated that it obtained from the data that it continues to receive both economic activity, inflation or the impact of monetary transmission on credit conditions.
Monthly average at 4.15%
Despite the fall in the 12-month Euribor on Friday and this Monday, the monthly average for July stands at 4.149%, which will be the new base reference for calculating the cost of variable-rate mortgages and the increase in mortgage payments for those who reviewed their loan in July. The Bank of Spain will put the postmark on that figure this week, which will mean the nineteenth consecutive monthly rise in the longest bullish streak of the Euribor in its history.
The impact on financing costs will be significant once again for those who reviewed their loans this month. For example, for a typical loan of 150,000 euros for a 25-year new concession, with a differential of 1 point over the Euribor, the monthly fee changed from 635 to 890 euros, that is, 255 euros more per month or about 3.0 00 additional euros for the next 12 months.
Since it reached its monthly record low of around -0.5%, new variable-rate mortgages have experienced an increase in costs of 4,030 euros per year using the same parameters. Since its daily lowest point in December 2021, the 1-year Euribor has threatened up to 470 basis points, considering the annual maximum of the index on July 12 (4.191%).
