Mortgage base rates in the Eurozone sank to a new low of 0.362% in September, the lowest level on record for the 12-month Euribor rate most commonly used to calculate mortgage repayments in Spain.
12-month Euribor fell 23 percent in a month, and 33 per cent compared to the same month last year, as deflation takes hold in the Eurozone increasing the chances that the European Central Bank (ECB) will intervene with fresh measures to drive down the cost of lending and stimulate the Eurozone economy, including Spain.
The September fall in Euribor was the biggest monthly decline this year and will reduce the average borrowers repayments by around 14 Euro a month, or 170 Euro per year.
Euribor has plunged an astonishing 40 percent since April, making Spanish mortgages cheaper just when the banks are starting to increasing mortgage lending again. New Spanish mortgage lending jumped 29 percent in July compared to last year.
Cheaper, easier mortgage borrowing is bound to increase demand for property in Spain if it continues. That will throw further price pressures into the mix of factors influencing demand for homes in the best locations of the Spanish coast and cities over the next 12 months.
Cheaper, easier mortgage borrowing is always a key variable to watch when trying to understand where the housing market is heading.