Eurozone borrowers, take comfort. If your rate is variable, you will pay less. The one-month Euribor index hit 0,40%, practically returning to its lowest level ever. So far the record – set on March 31, 2010 – is 0,397%. The 3-month index instead moved to 0,70%, also in this case approaching the all-time low of 0,634%.
The Euribor indicates the average interest rate on financial transactions in euros between the main European banks and the vast majority of variable rate mortgages are linked to its performance.
The latest figures therefore have a double meaning: on the one hand they signal the uncertainty and instability of economic prospects, on the other they sound like music to the ears of those who have taken out a mortgage by choosing the variable rate formula. In Italy alone, it is more than three million people.
But that's not enough. This situation seems destined to last much longer: the Euribor will remain below the historical average of 3% for at least the next 5 years. According to forecasts on futures, the indices will remain below 1% until September 2014 and will recover towards 2% only in 2016.
In any case, the Euribor is not a true panacea. Once again, the well-loved spread has a decisive influence on the cost of mortgages, as of credit in general. The yield differential between ten-year BTPs and their equivalent German Bunds has a profound effect on the cost of financing that banks have to bear on the interbank markets. Consequently, the figure also has a direct influence on the spreads that lenders apply to new mortgages.
In addition to the Euribor, however, the Eurirs indices are also down, mainly related to the calculation of fixed rate mortgages. The 20-year Eurirs fell to 2,55%, while the 25-year one slipped to 2,51%. But for those who still have to go to the bank to ask for a mortgage, there are very few doubts. Today the distance between the best floating rate (3,5%) and the best fixed rate (5,8%) is 2,3%. An abyss.
