Euribor, the rate normally used to calculate mortgage payments in Spain, plunged 17% to 4.35% in November, making annually resetting Spanish mortgages cheaper for the first time in 3 years.

Euribor, which peaked at an all-time high of 5.384% as recently as September, has plummeted in response to the European Central Bank’s (ECB) steps to liquefy the Euro zone’s financial system. Expectations of further interest rate cuts by the ECB are also helping to drive down 12-month Euribor rates. Analysts expect the ECB to lower interest rates by up 75 basis points at the beginning of November, and to continue lowering rates in 2009.

November’s record fall means that Euribor is now 5.6% lower than it was a year ago. Monthly repayments on a typical annually-resetting mortgage (140,000 Euros, 25 years, Euribor + 0.25%) will fall by 36 Euros a month, or 435 Euros a year. This will provide some relief to hard-pressed borrowers, but still leaves mortgage repayments higher than they have been for most of the last decade.

Euribor is expected to keep falling, and was down to a daily rate of 3.92% by the 2nd of December. Pedro Solbes, Spain’s Minister of Finance, has described Euribor’s downward trend as “very positive”, and claimed that if the trend continues, Spanish borrowers will soon be paying an average of 50 Euros less a month in mortgage costs.