Lombard Mortgages and Loans.
Lombard Mortgages and Loans. The mortgage market is undergoing a major transformation in recent times. Interest rates, which determine the cost of borrowing, have experienced a remarkable rise since the end of 2022. Reaching levels not seen for more than a decade. This has meant a tightening of the conditions of access to mortgage credit, as well as an increase in monthly payments for mortgagors.
However, this situation could change in the short and medium term, according to expert forecasts. The Euribor, the reference indicator for most variable mortgages in Spain, could start a downward trend in 2024. This would be a relief for consumers’ pockets and an opportunity for investors.
What factors influence the Euribor and how will it evolve in 2024?
The Euribor is the interest rate at which European banks lend money to each other. Its value depends on several factors, including the monetary policy of the European Central Bank (ECB), inflation, confidence among financial institutions and market expectations.
In 2023, the Euribor has been under strong upward pressure, mainly due to rising interest rates. By the ECB, which has raised the price of money to contain inflation and stimulate economic growth. The 12-month Euribor, the most widely used for calculating mortgages, rose from 3.34% in January 2023 to 4.16% in November 2023, its highest level since 2008.
However, analysts expect this trend to reverse in 2024, thanks to improved macroeconomic conditions and moderating inflation. According to the quarterly Strategy report from Bankinter’s Analysis Department1the 12-month Euribor could hover around 4.10% in December 2023, before easing to 3.90% in 2024 and 3.40% in 2025.
Other sources, such as the think tank Funcas2 or the Housfy platform3platform, coincide in forecasting a fall in the Euribor in 2024, although at different rates and magnitudes. Funcas estimates that the one-year Euribor will stand at 3.90% in the first quarter of 2024 and at 3.70% in the second quarter. Housfy forecasts that the Euribor will peak at the end of 2023 and fall to 3.25% in mid-2024.
What are the implications of these developments for mortgagors and investors? How does it affect Lombard Mortgages and Loans?
The drop in the Euribor will have a positive impact on mortgagors and investors, as it will reduce the cost of borrowing and improve financing conditions.
For mortgagors, the drop in the Euribor will translate into savings on monthly payments, provided that they have a variable or mixed mortgage linked to this indicator. The savings will depend on the amount, term and spread of the mortgage, as well as the time of the review. According to a Fotocasa simulator4an average mortgage of 150,000 euros for 25 years with a spread of 1% would go from paying 635 euros per month with a Euribor of 4% to paying 614 euros per month. With a Euribor of 3.25%, this means a saving of 21 euros per month or 252 euros per year.
For investors, the drop in the Euribor is an opportunity to access loans secured by financial products. Products such as bonds, shares or ETFs, under more favorable conditions. These loans allow liquidity to be obtained without having to sell the assets, taking advantage of their profitability and diversification. In addition, as they are secured by collateral, they usually offer lower interest rates than personal or consumer loans.
Preparing for the changing mortgage landscape can be key to optimizing personal finances. Are you ready to take advantage of these opportunities?
In this sense, Lombardos.es is positioned as a strategic ally for investors interested in this type of loans. Lombardos.es is a financial intermediation platform that offers secured loans on financial products, with an agile, transparent and personalized process. With the expert intermediation of Lombardos.es, investors can take advantage of the downward trend of the Euribor. We help you access loans backed by bonds, stocks or ETFs at more attractive conditions.
