Submit your mortgage. Expert economist confirms what will happen at the end of the year

In July 2024 the number mortgages issued on houses will increase by 23.5% compared to the same month the previous year, reaching 36,260 mortgages, the highest number for July since 2021. This increase coincides with a decline in the average interest rate, which rose from 3.26% in June to 3.17. % in July, the lowest level since June 2023. On the other side, average amount the number of mortgage loans also increased by 6.2% year on year, reaching €151,944, leading to a 31.2% increase in loan capital, reaching €5,509.4 million. This change reflects the impact of the recent interest rate cuts proposed by the European Central Bank (ECB) in response to slowing inflation and a reduction in the Euribor rate.

41% of mortgages signed in July were adjustable rate and the remaining 59% were fixed rate. adjustable rate mortgage They registered an initial interest rate of 2.99%, down from 3% for the first time since August 2023. On the other hand, fixed rate loans reached 3.32%. Despite these improvements, high house prices, which rose 8.5% year on year, continue to make housing difficult for many people to access, keeping prices and demand high.

Changes in the mortgage market

He real estate market and the mortgage industry are facing a moment of uncertainty. Home prices continue to rise and mortgage terms are constantly changing, affecting both those who already have a mortgage and those looking to purchase a property. Gonzalo Bernardos, professor of economics at the University of Barcelona, ​​shared an analysis of the evolution of mortgage lending until the end of 2024.

Bernardos stressed that significant changes are coming: “The cycle has changed and we are facing a recession.” This forecast is based on recent actions by the US Federal Reserve (Fed), which has cut interest rates, which could impact Europe, especially fixed-rate mortgages.

During 2023 and part of 2024 interest rates They have skyrocketed due to the Euribor rate hike, which has increased monthly payments on many variable mortgages. However, Bernardos predicts that this trend can be reversed. While adjustable-rate mortgages are more dependent on Euribor and European Central Bank (ECB) decisions, the analyst notes that fixed-rate mortgages could benefit from lower rates in other markets, such as the United States.

Bernardos estimates that by the end of 2024 best credit profiles They could access fixed mortgages with interest rates close to 2%, which would represent a great opportunity compared to recent rates that were above 3%. This change could mean significant savings for those renegotiating their loans or purchasing a new mortgage under these terms.

Bernardos analysis in the program Sixth suggests that the end of the Fed’s rate hike cycle could lead to similar trend in the ECBwhich would ease the pressure on family economies in Spain.

Euribor continues to be in free fall

Since July 2022, holders of adjustable rate mortgages have been suffering the consequences of rising interest rates European Central Bank (ECB). However, as of September 2024, this cycle appears to have come to an end, at least for now.

Euribor, an index that measures interest on many variable mortgages, surprised the market by closing below 3% in September for the first time since November 2022, reaching 2.9%. This will bring significant relief mortgagedwho will see their fees reduced by an average of €1,200 per year.

He accelerated decline in Euriboraccumulated over seven months of decline, exceeded analysts’ expectations. In March, the index was at 3.718% and continued to fall month after month, reaching an estimated value of 2.940% for September. This reduction will especially benefit those renegotiating their mortgages, as monthly payments could drop significantly.

If we take an example from mortgage 200,000 euros for 30 years and the interest rate of Euribor + 1%, the savings will be significant. Before the revision, if Euribor had been at a higher level (around 3.7%), the monthly payment would have been around €1,028. Given that the Euribor rate will be 2.9% after the revision, the new fee will drop to around €910, representing a saving of €118 per month, or €1,416 per year. In the case of a six-month check, where the previous fee was around 986 euros, it will drop to 910 euros.

The ECB, after raising in 2022, adopted more flexible position in 2024cutting rates twice, which directly affected the fall of Euribor. Analysts forecast the decline to continue, with year-end forecasts ranging from 2.5% to 3.2%, which could lead to greater savings for mortgage holders.