HOMEOWNERS with a mortgage due for its annual review this week will see their monthly payments drop again now that the Euribor is set to end July at a new historic low.
The Eurozone interest rate, upon which mortgages in Spain are based, will end the month on -0.282%, breaking the record low set in March 2018 of -0.191%.
From then until March this year, the Euribor continued to rise, but only very slightly and remained in negative figures.
It has now been in negative for 41 consecutive months and no interest rate rise has been put into place since 2011.
Last year, homeowners in Spain were, in many cases, starting to consider switching to fixed-rate mortgages due to the very tiny but steady rise in the Eurozone interest rate which experts had been warning of for some time.
Many feared it would rocket to its highest-ever level, which was 5.393% and reached in July 2008,- but the Central European Bank (BCE) has never introduced a sharp hike and has long been keeping rates down to aid growth in the common currency area.
Its chairman Mario Draghi had been talking about a possible slight increase after the summer, but in March he announced there would be no plans to do so until at least the year 2020 due to a weakening in the Eurozone economy.
Some of the daily rates seen in July were fairly drastic drops – on 24th, it fell to -0.321% and remained below -0.3% for seven days.
It has not risen to 0% since February 2016, when it first fell into negative figures.
This time last year, the Euribor closed July on -0.18%, meaning mortgages due for their annual revision now will see a saving of approximately €4.50 a month based upon a loan of €100,000 over a 25-year term.
A figure and loan term such as this would typically involve monthly repayments last July of €368.74, but a review of it this month would see these fall to €364.24.
But even if the Euribor shows signs of rising, mortgage holders in Spain would not need to rush to apply a fixed rate.
Unlike in the UK, where the central bank interest rate on the day the monthly repayment is due applies – leaving quotas constantly open to fluctuation on a variable-rate mortgage – in Spain, repayments are adjusted annually.
This means that if the Euribor starts to rise, homeowners have a full 12 months between reviews to decide what to do.