Great news for those who have a variable mortgage! The Euribor, the indicator that determines the interest on these mortgage loans, closed the month of April with an average monthly value of 3.703%. And why is that positive? Because the holders of these products whose rate is revised with the April value will finally enjoy a reduction in their installments.
For those mortgaged with an annual review, in fact, it is an important turning point, since their payments had not been reduced for two long years. According to mortgage calculations carried out by the financial comparator HelpMyCash.com, the monthly payments of these clients will decrease slightly, while variable mortgages with semiannual review will become cheaper by several dozen euros per month.
This reduction in price occurs thanks to the reduction in the Euribor, whose monthly value for April 2024 (3.703%) is lower than that registered a year ago (3.757%) and that of six months ago (4.160%). As a consequence, variable mortgages that are reviewed annually or semi-annually with their latest quote will become cheaper.
Let's take as an example an average variable mortgage of 150,000 euros for 25 years with an interest of Euribor plus 1%. With an annual review, your fees will drop from 856 euros to 851 euros, approximately. This will mean an average reduction of about five euros per month and about 56 euros per year, according to HelpMyCash calculations.
As for mortgages with semiannual review, the reduction will be more important, given that the value of the Euribor was higher six months ago than a year ago. For the previous example, the fees will be reduced from 891 euros to 851 euros, approximately. That is to say, they will become cheaper by almost 40 euros per month, which represents a semi-annual saving of nearly 240 euros.
It must be kept in mind, however, that the reduction depends on the outstanding amount of each mortgage reviewed, the period remaining until maturity and its interest rate. HelpMyCash makes available to users a free mortgage review simulator with which the new price of the monthly payments can be calculated taking into account all these parameters.
The reduction in variable mortgages is undoubtedly good news for the holders of these products, but that does not mean we have to ring bells. According to HelpMyCash analysts, although the Euribor is below its values from a year and a half ago, it has stagnated in recent months, which cools the most optimistic forecasts that pointed to a sharp decline throughout 2024. .
The economist and co-founder of the comparator, Olivia Feldman, advises lowering expectations about a possible reduction in the index. In her words, “the Euribor is already quite far from the interest rates of the European Central Bank (ECB), which are still at 4.5%. This is because the market has already discounted the June decline. In fact, the Euribor has stagnated at 3.7%, up tenth, down tenth, since December. We see no short-term reasons for the Euribor to fall further.”
Feldman adds that any possible rate cut by the ECB will probably occur on June 6 and anticipates that "the reduction will most likely be prudent, of 25 basis points." However, he warns that future decisions will be conditioned by the evolution of inflation in the eurozone and the containment of geopolitical tensions in the region.
In this sense, the co-founder of HelpMyCash highlights the possibility of an increase in public spending in Europe this year, especially in defense and development of the arms industry. This measure, according to her, could revitalize the economy and move the eurozone away from the critical zone of low economic growth and risk of recession. However, she also warns that this could put new strain on inflation. With inflation in the eurozone hovering a few tenths above the 2% desired by the ECB and away from the risk of recession, Feldman concludes that there is no reason to expect a pronounced drop in interest rates and, as a rebound, in the Euribor.
In this context, clients who have signed a variable mortgage have two options: either stay the same and wait for a reduction in the Euribor that allows them to pay a lower installment, or switch to a fixed or mixed rate to protect themselves against possible increases. or index stagnations. If you opt for the second alternative, HelpMyCash highlights that the bank now offers more competitive fixed interest rates, from 2.60% or even lower.
Those interested in converting their variable mortgage into a fixed one can carry out this operation with an agreement with their bank or by transferring it to another financial institution, either with a subrogation or through the contracting of a new mortgage loan (and the cancellation of the current). Entities such as Banco Santander, EVO Banco or Openbank, for example, offer to take on mortgage loans from other banks to convert them to the fixed rate.
According to the comparator's analysts, the most advisable thing is to request the change both from the bank of which you are a client and from other entities, either on your own or with the help of a mortgage broker. This way, various offers can be compared and you can haggle to achieve more competitive conditions.
