Since its peak in October 2023, the index used to calculate the terms of many loans in the euro zone has been declining. The time had come at the end of January 3.614% and is approaching the level of a year ago.
2023 has not been a good year for those who have to repay bank loans based on the Euribor index. Following interest rates set by the European Central Bank, they rose to 4.16% in October, the highest level since November 2008.
However, at that time he took the opposite path. In November it was about to cross the 4% level (4,022%). However, in December the economy experienced the sharpest monthly decline in the past fourteen years, closing the year at 3.679%. At the end of Januarythe average data for the month has fallen one step further and is placed at 3.614%.
After being negative since 2016, the index for calculating quotas became positive in spring 2022. Inflation started to rise in 2021 and the Ukrainian war made the situation even worse in March 2022, with prices skyrocketing. The Euribor contributed to these increases and since then variable rate mortgages, which take this index into account, have become much more expensive.
Despite having started to reinvest, those who now have to reconsider a home loan or other variable rate credit will pay the surcharge more expensive than in January 2023, when the Euribor was 3.337%. However, it will be so cheaper than in October.
We take as for example an average mortgage of 150,000 euros, to be repaid in 25 years and with a difference of 1%. The compensation to be paid in January 2023 amounted to 819.93 euros. If the assessment was carried out in October 2023, the compensation would be 890.92 euros. On the other hand, after a revision it would currently be necessary to pay 843.66 euros, 47 less than in October.
The Euribor is related to ECB interest rates, which have been gradually rising in the battle to keep inflation below 2. Since October, they have remained at 4.50%.
The bank’s officials announced in the fall the possibility of a cut in these interest rates in 2024, but the uncertainty caused by the conflict in the Middle East is keeping prices above what was desired – the Eurozone CPI was in December at 2.9% – and Pedro de Guindos, deputy director of the ECB, has just assured that the rate cut ‘has no calendar’.
However, the Euribor is falling, albeit gradually. After the decline in December, the price moved around 3.6% in January and on some days the daily price was even below 3.550%, the lowest level since February 2023.
Experts believe that if there are no major surprises, it will continue to decline in 2024, giving pause to many households and businesses with loans still to be repaid.
Source: EITB
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
