Almost two weeks ago the European Central Bank (ECB) announced interest rates remained at 0%. This is a historical minimum that you want to prolong over a long period of time with direct effects on the Euribor.
What future awaits the Euríbor in the coming months?
“Prices are not where we want”, Mario Draghi said in relation to inflation. As a result, the interest rate on principal refinancing operations and rates applicable to the marginal will remain at -0.40% and 0.25%.
Expectations will be expected until the end of the purchase of assets (minimum end of 2017) which is currently 60,000 million euros per month. And it will even go further if necessary.
Maintaining the expansionary measures in the ECB’s monetary policy and gradually implementing strategy changes will undoubtedly facilitate real estate activity.
In fact, it seems that interest rates and the Euribor will remain optimum for mortgages. And after the new low recorded in July, experts do not expect any changes in trend until the end of 2018 and early 2019.
Even cheaper mortgages
The Euribor, benchmark index in the vast majority of mortgages, closes the month of July by -0.154%. A new fall to minimums that lowers the average mortgage (120,000 euros at 20 years with a differential of 1%) at 62.64 euros per year. That is, about 5.22 euros per month.
Since penetrating into negative territory in February 2016, the euríbor has become an ally of the mortgaged. A trend that will not change in the near future, after almost fifteen consecutive months below 0%
In this sense, banks have been betting on fixed-rate mortgages. Or the change of existing variable and fixed type. A formula that will facilitate the future mortgage law, limiting the commissions for such management.
No changes in the short term
The truth is that many experts agree that interest rates will remain low for a long season. And that the withdrawal of stimuli by the ECB will not occur in months, but in years.
Recall that the one-year Euribor is the benchmark to establish prices for 250 billion assets. Not just mortgages. And that any small change would need a gradual strategy.
The Euribor equals the value of money in the short term. It did not reflect the economic growth of the euro zone and forced to maintain expansive policies to balance inflation. Still far from the 2% level considered optimal.
That is why there is some divergence among the experts. Some see a timid rise in the euro area in the last quarter of 2017. Whenever the ECB raises the withdrawal of stimulus for 2018.
While others do not expect rate hikes for the coming months. And yes facing the end of 2018 or early 2019. Turning the index to positive ground between 2019 and 2020.
