In January, the Euribor rate continues to decline, causing the average mortgage to rise in price by only seven euros | Economy

Euribor continues to provide hope for those with variable mortgages. The indicator to which most of these loans in Spain fall closed January with an average of 3.609%, meaning it is still on a downward trend from 3.679% in December. The change was very minor, but it will be felt when calculating mortgages as the comparison with what happened a year earlier is important. And the market is slowly approaching a turning point where we will see cheaper notes again. This is not yet the case, but many borrowers will perceive the January bill as good: for an average mortgage the increase will be about 6.5 euros per month. That is, a ridiculous amount compared to the increases they have faced recently, although we must take into account that they are cumulative and any loan is now much more expensive than two years ago.

An increase of 6.5 euros per month means paying 78 euros more per year. EL PAÍS calculations are made based on the hypothesis of an average mortgage (€145,510 payable over 24 years, according to INE data for 2022), linked to Euribor and with a differential of one point. The January increase is the smallest in two years and is light years away from what was common just a few months ago. For example, in January 2023, recalculating the average mortgage meant paying €261 more per month. But this still does not represent a final relief of quotas, since Euribor is now still above the level of 12 months ago.

Those who look at letters every six months will find such comfort as they did in December. Since the Euribor rate is now lower than in July 2023, these loans will become cheaper. The Association of Financial Users (Asufin) estimates that in these cases the monthly savings will be around €31 per month for every €100,000 of borrowed capital. He estimates that two out of every 10 variable mortgages are restated every six months, as reviews are most common in Spain once a year.

In January, Euribor completes a consecutive quarter of decline. Behavior last month was very moderate after the biggest decline in 14 years in December. But it shows that the market continues to expect central banks to cut interest rates. They have not changed the official price of money for now, but are expected to do so within a year once inflation is under control. And Euribor, which effectively reflects banks’ future lending expectations, responds to these forecasts.

Convulsive turns in monetary policy over the past two years have left scars on the market. Europe has gone from an atypical and prolonged period of ultra-low rates to the sharpest rise in money prices in the history of the ECB. This led to a collapse in mortgage contracts last year as many families stopped paying their bills. And those signed up have long been dominated by fixed rates (with unchanged rates unrelated to what happens with Euribor) or mixed rates (which usually start with a fixed rate for several years). In addition, innovations and subrogations have become more frequent: mortgages that change the terms (or directly from the bank) so that the same loan costs less.

The next step for the market will be to adapt to the beginning softening of prices. The Bank of Spain itself in its latest Report on the financial position of households and companies, published this Wednesday, indicates that mortgage lending has weakened since March. And this change in sensitivity can already be seen in the commercial offers of the subjects. “Usually every year starts with an upward correction in mortgage prices, but this year the opposite happened,” sums up Simone Colombelli, director of mortgages at comparator iAhorro, in her analysis. The expert believes that “when the European Central Bank starts cutting rates, Euribor will fall even faster.” For now, most borrowers will have to wait at least another month.