A summary of the most important news on Spanish mortgages and interest rates
- Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 1.4% in October to a record low of 1.243%.
- Euribor has now fallen for 13 consecutive months, and is 76% lower than it was a year ago. The graph above illustrates how dramatic the fall in Euribor has been.
- Monthly repayments on a typical annually-resetting mortgage (150,000 Euros, 25 years) will drop by around 300 Euros a month, or 4,000Euros a year, to 640 Euros/month.
- Significantly lower monthly mortgage repayments have given many borrowers financial breathing space they did not have when Euribor stood at 5.26% in October last year. Estate agents report this is taking some pressure of the property market, by reducing the number of forced sellers. Many more borrowers can now afford to take their homes of the market in the hope of selling when the market recovers.
- The average value of new residential mortgages signed in August fell 19% to 11,753 Euros compared to the same time last year. The number of new mortgages signed by 6.6% to 52,482. Fewer, cheaper mortgages put downward pressure on property prices.
- The average interest rate on new mortgages in August was 4.3%. Interest rates from banks (4.15%) were better than savings banks or cajas (4.46%).
- Many analysts expect Euribor to continue falling until the early part of 2010, further reducing the cost of money to Spanish mortgage borrowers.