The 12-month Euribor continues to accumulate data and sessions for the monthly average for August, and the possibility of breaking the long bullish streak that has been going on since December 2021 is getting closer. Today’s daily price, Friday, August 25 , has settled at 4.045%, slightly below its value on Thursday and maintains the provisional monthly average at 4.07%.
In this way, the August average is on track to drop one step compared to July (4,149%) when only four data and business days are missing to complete the period, which will later transcend as an official record when calculating the cost of mortgages. . . However, the appearance of Christine Lagarde (ECB) these days at the Fed symposium in Jackson Hole may change the course of the interbank market and her Euribor index next week.
The evolution of the Euribor is closely linked to the expectations of official interest rates, which are defined based on price stability. In recent weeks, some economists have defended the need to raise the current inflation target ceiling, which stands at 2%, to align it with the structural change that has occurred in the global economy after the pandemic.
The wave of inflation that began in the summer of 2021 led central banks to take monetary tightening measures, which the European Central Bank (ECB) joined somewhat later. This explains why Euribor rates are below the levels set by their counterparts such as the Federal Reserve (5.25-5.5%) or the Bank of England (5.25%).
The Euribor calculation involves only 19 European banks this year, including four Spanish banks: Santander, BBVA, Caixabank and Cecabank. The European Monetary Markets Institute (EMMI) collects daily data on actual transactions at various terms in the interbank market and publishes an aggregate figure that is considered as a reference. Based on these transactions, market players expect rates to remain stable or even decline in the coming year.
Your monthly average is used as an official reference to calculate the base cost of variable rate mortgage loans. Financial institutions add a spread to this index to determine their earnings. In Spain, the 12-month Euribor remains the most widely used index and is revised annually, which means that mortgage holders face adjustments in their payments every year.
Considering the provisional average for August at 4.07%, the interannual differential stands at 282 basis points. This is the smallest rise since September 2022, when it exceeded 2%. Currently, it remains above 4%. Analysts anticipate that mortgages of this type will continue to rise at least until spring 2024, at which time year-on-year comparisons could start to show declines.
