Bad news for mortgages

Euribor Trends: A Closer Look at Mortgage Implications

The Euribor, the benchmark interest rate for variable-rate mortgages in Spain, edged up slightly on Friday, February 21, 2025, reaching 2.463%. This rise, a mere thousandth of a percentage point, follows a period of fluctuations in February after a lull in January.

This recent shift in the Euribor comes after the European Central Bank (ECB) signaled its intention to further reduce interest rates. ECB President Christine Lagarde stated, “we are still in restrictive territory,” suggesting that further rate cuts could be on the horizon.

Experts anticipate continued declines in the Euribor throughout 2025, potentially reaching 1.5% or even lower. This outlook bodes well for homeowners with variable-rate mortgages, as lower Euribor rates typically translate into reduced monthly payments.

How Much Could Mortgage Rates Decrease?

According to Roams, a mortgage comparison platform, individuals who review their mortgages with the current euribor data could see a monthly savings of approximately 10%.Those renewing annually would see their payments drop from €843.06 to €755.72, signifying a €87.34 monthly and €1,048 annual saving.

IaHorro, another mortgage comparator, estimates that holders of variable-rate mortgages with a 0.99% differential on a €150,000, 30-year loan would see their monthly payments fall by approximately €90, recovering some of the losses incurred during 2023’s meaningful interest rate increases.

Kelisto, yet another mortgage platform, projects a 9.76% reduction in monthly payments for those renewing their mortgages semi-annually, which would translate to a €84.63 decrease per month.

Is it Time to Change Your Mortgage?

Sergio Carbajal, from Racian Mortgages, suggests that now is a favorable time to switch to a fixed-rate or mixed mortgage if your current mortgage is variable. “Any offer of a fixed or mixed will be more economical than a mortgage referenced to the Euribor,” he explains. Current fixed-rate mortgage offers are approximately 12% higher than variable-rate mortgages, a trend expected to continue in the coming months.

However, carbajal emphasizes that switching mortgages is no longer free. Clients now incur the cost of a home appraisal, typically around €300, and a potential subrogation commission, which varies depending on the original mortgage contract. This commission can range from 0% to 2% of the outstanding loan balance.

what Lies Ahead for Euribor in 2025?

Simone Colombelli, the mortgage director at IaHorro, suggests that the Euribor could decline by another percentage point, reaching 1.5% or even lower by the end of 2025. This projection assumes that the Euribor remains around 2% by June, and continues its downward trend.

Kelisto anticipates continued ECB rate cuts throughout the first half of 2025, primarily guided by the U.S. Treasury’s fiscal policies. This, they believe, will push the Euribor down to around 2-2.25% by year-end.

Other financial institutions and agencies are maintaining their previous Euribor predictions, with Funcas revising its forecast from 1.75% to 2.25% for the end of 2025.

given the recent trend of declining Euribor predictions, should borrowers switch from variable-rate to fixed-rate mortgages, and what factors should they consider when making this decision?

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Euribor Trends: A Mortgage Expert’s Perspective

An Interview with algusto,jiménez, Mortgage Specialist at terza mortgage Advisors

The Euribor, the benchmark interest rate for variable-rate mortgages in spain, has seen a slight uptick recently, reaching 2.463% on February 21, 2025. While this increase is negligible, it comes amidst signals from the European Central Bank (ECB) suggesting further interest rate cuts. To shed light on the implications for mortgage holders, we sat down with algusto Jimenez, mortgage Specialist at Terza Mortgage Advisors.

Recent Euribor Fluctuations

Archyde (A): Could you walk us through the recent Euribor movements and their meaning?

algusto Jimenez (AJ): Of course. The Euribor has been fluctuating this February after a relatively stable January.The latest rise, though minimal, is a reminder that rates remain sensitive to market conditions.The ECB’s signals of potential rate cuts hint at a loosening monetary policy, which could benefit mortgage holders.

Mortgage Implications & Potential Savings

A: How do these recent Euribor trends impact variable-rate mortgage holders?

AJ: For homeowners with variable-rate mortgages, even small movements in the Euribor can translate into significant savings or additional costs. with predictions suggesting the Euribor could drop to 1.5% or lower by the end of 2025, we could see monthly savings of around 10% for some borrowers, according to estimates from platforms like Roams, IaHorro, and Kelisto.

Should Borrowers Switch to fixed-Rate Mortgages?

A: Given the current Euribor trends, is it a good time for variable-rate mortgage holders to consider switching to fixed-rate or mixed mortgages?

AJ: Now may be an opportune time, especially for those whose variable-rate mortgages are more expensive than fixed-rate alternatives.However, borrowers should consider the fees involved in switching mortgages, such as home appraisal costs and potential subrogation commissions.

Euribor Outlook: What Lies Ahead?

A: What are your predictions for the Euribor for the rest of 2025?

AJ: While predictions can be uncertain, I agree with some market analysts who expect the Euribor to decline further, possibly reaching 1.5% or lower by the year’s end. However, its essential to remember that the actual trajectory depends on various factors, including ECB policy decisions and market dynamics.

Final Thoughts

A: Lastly, what advice would you give to mortgage holders navigating these fluctuating Euribor trends?

AJ: It pays to stay informed and regularly review your mortgage options. Keep an eye on the Euribor trends,and consider consulting with a mortgage advisor who can provide tailored guidance based on your unique financial situation. Now more than ever, being proactive and well-informed can help you make the moast of evolving market conditions.

This interview has been edited for clarity and length.