Home News Euribor in negative figures for second consecutive month

Euribor in negative figures for second consecutive month

Published on 05/04/2016

For the second month in a row it has registered negative figures at the end of the month.

Just a few days ago, at the close of March, the Euribor fell to -0.12%, reducing even lower than February’s figure of 0.008%.

This is fantastic new for mortgage holders who are due an annual review because, as a consequence, he will only have to pay the interest based on the differential rate set by the bank and nothing else.

Unfortunately, the bank won’t be paying the mortgage holder any money, as should technically be the case seeing that the Euribor is in negative figures. The lower the differential rate, however, the closer to 0% interest rates would be.

The interest rate on mortgages is divided into two parts: the differential and the market indicator price, in this case, the Euribor, which is currently situated below 0%.

For this reason, the client will only have to pay the differential rate for the following year at least. If you took out a mortgage at 1.5% + Euribor, you will only have to pay back the 1.5%.

The differential rate for very new mortgages is much lower than it was, say, even just two years ago. Today there are offers of 0.7% +Euribor, where in 2014, they would have been averaging at 2% +Euribor.

In any case, anyone who is due to have their mortgage repayments reviewed at the moment will be in for a nice surprise as their monthly repayment amounts will reduce even further.

Short-term forecast

In the short term, experts have calculated that the Euribor should maintain its negative status for the next 12 months, although many believe that its current rate is as low as it will get and that the rate is bottoming out.

At the end of 2014, the Euribor registered at 0.329%, but by the end of 2015 it had fallen to 0.059%, a massive drop in just 15 months.

Many believe that now the Euribor will stay around its current rate, despite the fact that the European Central Bank (ECB) hasslashed the benchmark interest rate yet again, leaving it at 0.00%, a new historic minimum.

And, according to some, the Euribor will remain in very low figures for the next 3-4 years.

Source: www.idealista.com


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