Euribor – the rate normally used to calculate mortgage payments in Spain – closed last week at the lowest level in its history, and then started this week plumbing new lows, touching a daily rate of 1.919% on Monday. At this rate Euribor looks set to close March at 1.959%, below the previous record low of 2.014% in June 2003.

That may drive down monthly repayments for borrowers with annually-resetting, variable-rate Spanish mortgages. Payments on a typical mortgage could fall by more than 200 Euros a month, or close to 2,500 Euros a year.

Unfortunately, many borrowers may find that, buried in the small print, their lender will have an excuse for not lowering the rates they charge. Many mortgages come with a ‘floor’ clause, below which mortgage repayment rates cannot fall.

Euribor has been falling in line with the base rate set by the European Central Bank (ECB), which recently lowered the base rate to just 1.5%. This is likely to spark off galloping inflation sometime down the line, though in the short term governments in the Euro Zone and the ECB are more worried about deflation.

The authorities are lowering base rates to try and make life easier for everyone who borrowed too much, including governments. It looks like the plan is to inflate the problem away, punishing savers in the process.

When inflation takes off, and money starts to lose its value, investors might start reconsidering Spanish property as a place to store their wealth.