Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell to a record low of 1.334% in August, down from 1.41% in July. Euribor is now 75% lower than it was this time last year, when it stood at 5.323%, leading to significant savings for mortgage borrowers on annually resetting mortgages.
After the fall in August, Euribor has now fallen for eleven consecutive months, setting a new record low in each of the last 6 months. Euribor has gone from record high to record low in the space of a year. However, mortgage experts do not expect Euribor to drop much further from here, certainly not below 1%.
Thanks to the latest drop in Euribor, the average borrower can expect to save around 316 Euros per month, or more than 3,800 Euros per year, on mortgages that reset around now. But consumer groups have complained that many banks are not passing on falling rates to customers, using the opportunity to raise the margins they charge borrowers.
Nevertheless, CECU – a Spanish consumer group – has urged borrowers to use the fall in base rates to try and remortgage, noting that the number of people doing so is up nearly 65% compared to last year. CECU has also called on borrowers to report banks for including illegal clauses in mortgage contracts.
