The Euribor drops to 3.70% in April and makes variable mortgages with annual review cheaper for the first time since the end of 2021

The de-escalation of the Euribor is taking a long time to come, but it is beginning to be subtly noticeable in the pockets of the mortgaged. The reference index for the vast majority of variable rate mortgages in Spain has fallen slightly in April to 3.703%. Although the decrease is just over one hundredth compared to the previous month, this first drop after two consecutive increases has been enough to surpass the levels at which the indicator was a year ago, which represents the first reduction in the monthly quotas for mortgages with annual review from the end of 2021.

Although it remains above 3.7%, the Euribor has fallen slightly in April compared to the average of 3.718% at which it closed in March. Despite the decrease, the indicator is still above the level at which 2024 started, recording an average of 3.609% in January, its lowest level in almost a year. This behavior at the beginning of the year invited confirmation of the long-awaited de-escalation of the Euribor, which exceeded 4% for much of the second half of 2023. However, the increases recorded in February and March frustrated this trend, which could now recover.

Although the ups and downs in recent months have been very subtle and the indicator is stuck at around 3.7%, the decrease in April has caused the Euribor to fall below the rate in the Eurozone for the first time in more than two years. which was located a year earlier. In April 2023, the index closed at an average of 3.757%, half a tenth above the data known this Tuesday. This year-on-year drop will allow mortgages with annual review that are updated with the April data to register the first reduction in their installments since 2021, although the respite will be very small.. “The first drops in mortgages with annual review have arrived in April not so much because of a sharp drop in the Euribor, but because the indicator is already beginning to be compared with the figures from the spring of 2023, when a very pronounced upward path began,” explains Estefanía González, spokesperson for the comparator Kelisto.es.

For example, a person who took out an average variable mortgage of 150,000 euros for 30 years in April 2021, with a differential of 0.99% over the Euribor, will barely notice a reduction in their monthly payment of about 4.38 euros.. This slight decrease contrasts with the increases of the two previous years in which this average fee went from 448.98 euros in April 2021 with a Euribor at -0.487% to 481.55 euros per month after the 2022 review – when the indicator entered positive territory for the first time since February 2016 – and rose again the following year to 759.36 euros per month, almost 300 euros more than at the beginning. These amounts are doubled in the case of a mortgage of 300,000 euros under the same conditions.. The decrease with the April 2024 data would be just 8.76 euros per month, going from paying 1,518.73 euros in 2023 to 1,509.97 euros per month, still 612 euros more than in 2021.

“The reduction in price that we see this month in the installments of variable mortgages due to the stabilization of the Euribor is very slight and does not compensate for the increases in prices that mortgage holders have suffered in the last two years,” confirms Simone Colombelli, director of Mortgages at iAhorro, if He clarifies that this first relief is “good news for citizens and for the mortgage market in general, which is beginning to recover.”

The reduction is more pronounced in the case of mortgages with semi-annual review, since the drop in the indicator is steeper compared to the 4.160% registered six months earlier, in October 2023, when it reached its highest threshold in thirteen years.. In the case of a loan of 150,000 euros, the update with the data from April 2024 will reduce the average payment by 39.18 euros to 747.62 euros per month. If the total amount of the loan were 300,000 euros, the reduction would double and the amount would be 1,573.59 euros per month, compared to the 1,495.24 euros paid in the previous semester.

In any case, the forecasts indicate that these first declines will continue in the coming months, in which the European Central Bank (ECB) is expected to change the course of monetary policy in the eurozone. “If the ECB lowers official interest rates after its June meeting, we could begin to see more drops in the average monthly Euribor data and also some rate cuts in banks' commercial offers on mortgages,” Colombelli predicts.. “As the rate drop will not be very pronounced, we do not believe that the situation will immediately take a radical turn; the outlook will be more positive but not very different from the current one,” he clarifies.