It can be said that the Euribor has experienced a round trip in 2021. The index, the most used to benchmark variable rate mortgages, closed January at -0.505 percent, setting a new record. And, practically, December will end at the same level, since, a few days before the end of the month, it is trading on average at -0.504 percent.
Along the way, the index hit a year’s lows at -4.77 percent in October, the highest rate in 12 months, coinciding with the idea that inflation was no longer as temporary as central banks insisted and that they could withdraw economic stimuli before the term expired.
In fact, it was the most aggressive speech of the United States Federal Reserve that motivated these upward movements, since, after the October meeting, the market prepared for the central bank to announce in November the gradual withdrawal of stimuli.
The market expected the European Central Bank (ECB) to follow the path set by its counterpart, but the distance set by the president of the ECB, Christine Lagarde, caused the Euribor to fall again.
Lagarde opts for prudence
Experts were not surprised by this new fall in the Euribor in December.
“It is possible that in the coming months we will have another record downward, especially after the latest statements by Christine Lagarde, in which she indicates that there is no interest rate hike now or in 2022,” explained the director of mortgages. from iAhorro, Simone Colombelli.
Added to these statements by the head of the ECB is the outbreak of the omicron variant, which raises more doubts about the recovery in the European economy.
Indeed, the member of the ECB Isabelle Schnabel has recognized that the supervisor of the euro area is not in a hurry to undertake the normalization of monetary policy.
Moreover, “it will be gradual” has sentenced, after acknowledging that the new omicron variant has generated numerous headwinds.
As for inflation, he admits that it will be high for a prolonged period of time, but that it will decline over the next year.
According to its estimates, released at the December meeting, euro area inflation in 2021 will be 2.6 percent, compared to September’s forecast of 2.2 percent, to accelerate in 2022 to 3.2. percent, compared to the 1.7 percent previously anticipated (1.5 points more than the previous forecast).
Inflation will only begin to relax in 2023 when it closes at 1.8 percent, three tenths higher than previously expected.
The Euribor will remain negative
Everything seems to indicate that the Euribor will remain negative for several more years. Bankinter has revised its forecasts for 2022 and 2023. Thus, next year, the Euribor will close at -0.30 percent, compared to the previous estimate of -0.32 percent.
However, the caution with which the ECB will move will make it take longer for the indicator to return to positive territory. Analysts expect the Euribor to maintain an upward trend throughout 2023, but slower than in their previous forecasts.
Good time to take out a mortgage
This paralysis of the Euribor will be positive for both the mortgaged and the future mortgaged.
For the former, although they no longer hardly notice the fall of the Euribor in the review of their credits (just a few euros a month), they will allow them to continue having lower fees than if the Euribor were trading positive or began to rise.
For the latter, this will mean that there will continue to be mortgage offers. “The offers from financial institutions are positioning us in one of the best times to request a mortgage loan”, highlights Colombelli
The expert recalls that, in recent weeks, four of the main banks have lowered their offers in the fixed rate in order to attract the last clients of this 2021.