Euribor will end the year at 2.30%.

Euribor ends November at 2.461%. slightly below the 2.50% level we promoted in our comments in previous months, which is the lowest level in a year. The average rate for November temporarily remains at 2.506%, which will represent a significant reduction for those renegotiating their mortgage annually (it was listed at 4.022% in November 2023).

Euribor hits lowest level in a year

ECB rate cuts, fears of US tariffs and economic weakness have seen a key indicator of adjustable-rate mortgages fall to their lowest level in years. Among the most important economic data of recent weeks, we highlight the recovery of the headline consumer price index, which again rose above the target of 2% due to the comparative effect. In particular, according to the latest published data, prices rose by 2.3%, and core inflation rose by 2.7%, although in this case it was one tenth lower than expected.which is similar to services inflation, which fell to 3.9% from 4% in the previous month.

In a context of very weak economic growth in Europe, with some of the most important macroeconomic indicators publishing data similar to those of 2008, with inflation allowing for stimulus measures, and with highly indebted countries, as we see in France, We believe that the responsibility for stimulating growth lies almost entirely with ECB policy, so we expect aggressive rate cuts in the coming months.

However, on the opposite side we find current inflation risks due to the comparative base effect, the victory of Donald Trump, which in principle will cause prices to rise due to his protectionist policies, and the fall of the euro as variables. this may preclude more aggressive stimulus measures. The role of the ECB in any case becomes particularly relevant in the medium term.

Taking as a basis the amount and average repayment period of a mortgage in Spain, which is 150,000 euros and 25 years, The average mortgage will fall by around €127 per month, or more than €1,500 per year.

In the latest report published by INE, corresponding to September, the total number of residential mortgage loans increased by 33.9% compared to the previous year, and the average volume of transactions increased by 4.5%. In terms of loan type, the average interest rate was 3.14% and the average term was 24 years. 38.6% of residential mortgages were issued at an adjustable rate and 61.4% at a fixed rate, consistent with the data reported for the previous month.

XTB’s opinion on the evolution of Euribor

At XTB, we continue to believe that interest rates should fall to between 1.50% and 1.75% at the end of 2025, leading to a significant drop in Euribor next year. For the rest of this year, we are hopeful that it could still fall to levels close to 2.30%, with the ECB meeting on December 12 being a key event in the coming weeks. We expect a 25 basis point rate cut, which has already been priced into the market, but we believe The most pressing issue will be the downward revision of economic growth forecasts.which will mean a more aggressive program of cuts than expected, resulting in a lower Euribor. In terms of inflation, the latest rise was expected by the market, while inflation in the services sector, which is most dependent on the labor market, began to decline. Bad economic data has intensified in recent weeksIn addition, political instability in the two main powers of the region is gradually increasing. The example of France confirms our view of the few existing instruments for stimulating economic growth. which leaves the ECB as the main driving force in the common area.