Euribor rate falls below 3% for first time in almost two years

The drop comes ahead of a possible rate cut that the European Central Bank may approve later this week

José María Camarero

Madrid

Tuesday, 10 September 2024, 11:59

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The Euribor (Euro interbank offered rate) continues to provide good news for mortgage customers after breaking the 3% mark for the first time in almost two years on Monday 9 September. It stands at 2.98%, registering a fall to a level not seen since November 2022.

The downward trend in the Euribor comes as the European Central Bank prepares for a meeting this Thursday in Frankfurt. The organisation chaired by Christine Lagarde plans to undertake what could be the second interest rate cut in the Eurozone after approving a first cut in June from 4.5% to the current 4.25%. It could go down by another quarter of a point, according to analysts.

The Euribor is ahead of the European Central Bank's movements and on this occasion it is moving downwards. The banking indicator already fell in August to 3.16%. This is almost one percentage point lower than a year earlier in the summer of 2023, when it was around 4%. The downward path of the Euribor so far represents an average saving of around 80 euros per month for families with variable credit mortgages, around 900 euros of savings per year.

European banks already anticipated the Euribor could move between 2.5 and 3% in this last part of the year, a situation that, according to Monday's data, could be anticipated even faster than initially expected.

Clear symptoms of relief

In line with the banks' expectations, customers will see more relief, particularly for those with variable rate mortgages. These households have suffered the most in the last two years from the whirlwind of interest rates deployed by the European Central Bank. In the summer of 2022, amid the price crisis and with inflation soaring in some cases to over 10%, the institution undertook the biggest rate hike in the shortest possible time in its short history: it went from 0% to 4.25% in less than 24 months.

This had a significant impact on a large part of family budgets. In some cases, mortgage repayments increased by up to 200 or 300 euros per month. Following this, the government and financial institutions agreed on the new code of good practices, which included measures to alleviate this situation, especially among the most vulnerable families. However, barely 10,000 households have joined these measures in recent months.

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