A summary of Spanish mortgage and interest rates news
- Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.6% in February compared to the previous month.
- Euribor now stands at 1.225%, the lowest level on record.
- Euribor is 43% down over 12 months, and 77% down from its all time high of 5.393% in July 2008.
- As a consequence of the latest reduction in Euribor, repayments on a typical annually resetting mortgage (150,000 Euros, 25 years, Euribor +0.75%) will fall by around 65 Euros a month, or 780 Euros a year.
- When Euribor rose a fraction in December I suggested that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January and February, that still probably holds true. Flipping around is often consistent with a period of change.
- Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. By March borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower.
- Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.
- New mortgage lending fell by 34% last year