Euribor, the rate normally used for Spanish mortgage interest payments, fell to 0.298% in January, the lowest rate on record, and 47% less than a year ago, as illustrated by the chart above.
This means that a mortgage of €120,000 with a 25-year repayment period will go down by €14.8 a month, or €177.70 a year.
Gustavo Martínez, an analyst at XTB, told Europa Press that the policies adopted by the European Central Bank (ECB) with interest rates close to zero are forcing the index “to low levels and consolidation around 0.2 per cent”.
New liquidity measures introduced by the ECB have lead to an “injection of capital worth €60,000 million a month that has led to greater confidence in credit flows,” he said.
Cheaper and easier credit will mean banks lower their spreads above Euribor as they compete for the best clients, he forecasts.
“Thanks to the combination of very low interest rates together with massive injections of cash we could say that this is the best moment in decades to apply for a mortgage,” said Martínez.
Banks are already reducing their margins in the search for good clients, suggests a recent study by the financial comparison website Bankimia, which found that spreads have fallen from 2.788 per cent in January 2014 to 2.0272 now.
A recent survey by Kelisto – another financial comparison website – found that annual repayments of the average mortgage have fallen from €6,394 at the start of 2014 to €5,932 now, saving the average Spanish mortgage borrower €462 a year.