Unanimous agreement. Analysts believe that the market has erred on the side of optimism by believing that the first interest rate cut by the European Central Bank (ECB) will occur in the first half of the year. In fact, they are much more cautious and delay the first reductions in the intervention rate to the third quarter of the year. Also, aim for the rate of descents to be more moderate than the rate of ascents. This will cause the Euribor to also moderate its declines. The good news is that it will certainly be June when mortgage holders will really notice a relief in the review of their mortgage loans.
The Euribor, the index to which most variable rate mortgages in Spain refer, has ‘sprinted’ by 10%, a much more moderate percentage than that recorded last year. However, the declines expected in the following twelve months will be 5%. Thus, according to the estimates managed by Renta 4, the Euribor will close at 3.90% in March (although it has already pulverized these levels), to stand at 3.75% in the second quarter (June), and would continue to deepen the falls until the end of September at 3.55%.
At the end of December 2024, there would have been a decrease of 35 basis points with respect to this year’s monthly average, these analysts point out, which would allow the year to end with a Euribor of 3.40%. However, Bankinter believes that the Euribor will fall more intensely although it predicts that rates will fall by 4% next year. Thus, at the end of 2024, the Euribor would stand at 3.25%. For its part, Caixabank believes that the Euribor will end next year at around 3%. We must not forget that the index moves by expectations, reacting sooner to increases and falls in interest rates.
This decrease will allow variable rate mortgage holders to experience cuts in their payments. The first drops will be noticed by those mortgage debtors who review their credits in May. However, it will be the mortgage holders who update in the third quarter who will experience greater relief, since in September the difference could reach almost 60 basis points in their favor compared to this year.
By 2025 the Euroíbor would continue to moderate, according to experts’ estimates. Both Bankinter and Renta 4 placed the Euribor below 3% at the end of December of the following year, although the pace of decline would continue to slow down. Bankinter places it at 2.75%, while Renta 4’s estimates are similar with a closing rate of 2.80%. What it does seem is that the Euribor will not return to the historically low levels experienced in the past.
The yield curve also points downwards.
The declines in the Euribor could not be explained if a cut in the price of money in the eurozone were not on the table. The body chaired by Christine Lagarde avoided referring to a drop in interest rates at the meeting a week ago, but everything indicates that it will occur next year, but later than the market suggests. Thus, the first cut movement would be in the third quarter at the earliest. According to Renta 4, Bankinter and Natixis, specifically in September. Bank of America, on the other hand, advances it to the last month of the second quarter: June.
Regarding the type of intervention, experts believe that it will end next year at 4%, according to calculations made by Bankinter. For its part, Renta 4 discounts two cuts in the price of money, a first of 25 basis points to 4.25% in September and an additional 50 basis points, placing rates at 3.75% in December. Beka Finance is also betting on two rate cuts in the final stretch of next year, while Axa IM points out that it is unreasonable to bring forward cuts to the first quarter of next year
Regarding ECB rate futures, and once Lagarde’s words have been digested, it places interest rates at 3.9% in February and 3.8% in March, while in April it would reach 3.56 %. And from there, it would fall to 3.7% in June and 3.1% in July, in line with estimates. By 2025
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