Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell from 1.909% in March to 1.771% in April, a percentage change of -7.2%.
This is the lowest that Euribor has ever been, and is 63% lower than it was a year ago. Compared to July last year, when Euribor peaked at 5.393%, Euribor has fallen by 67%.
After the latest drop in Euribor, borrowers with annually resetting mortgages should see their annual mortgage repayments fall by between 3,000 and 5,800 Euros, in theory at least.
In reality, however, some borrowers complain that their payments haven’t fallen at all, and in some cases, have actually risen. This may be due to banks using a derivative of Euribor, such as a moving average, that lags the fall, or due to other malicious conditions buried in the small print (and so beloved by mortgage lenders), such as interests rate ‘floors’ below which mortgage rates cannot fall.
Euribor is derived from the European Central Bank (ECB) base rate, which is currently at 1.25%. The markets are expecting another interest rate cut in May, so that is already baked into the current Euribor rate.
Experts expect Euribor to keep falling in the coming months to around 1.25% at the end of the year.