The Euribor falls to its lowest level in almost three years.

BarcelonaThe one-year Euribor, the benchmark for variable-rate mortgages, closed May at an average of 2.081%, compared to 2.143% in April. It thus falls to the level of August 2022, just months after emerging from the negative territory it had held for six years. The fall in this index, which could continue to fall below 2% by the end of the year, according to expert estimates, has the positive effect of lowering the payments for those linked to it and also the interest rate at which new loans are offered. The most immediate effect is that a typical 25-year mortgage of €156,698 (the one collected by the National Statistics Institute for March) with a spread of the Euribor plus one percentage point, will go from having a monthly payment of €887.07 to €749.70, a reduction of €1,648.44.

The Spanish Mortgage Association has a calculator so that everyone can calculate how their monthly payment will be. For those users who have a revision based on the May index, there will be a reduction in the payment. This trend is expected to continue, although gradually at a smaller amount, during the rest of the year because it will be compared to levels of more than 3% and more than 2% twelve months ago.

But the counterpart to the decline in mortgages is that housing prices will continue to experience a strong upward push given the growing demand because it is more profitable to buy (for the monthly payment) than to rent (with increasingly higher prices and limited supply). The fact is that the rental market is dwindling, driving demand toward acquisition, especially of second-hand homes. In fact, home sales soared 52.3% in March compared to the same month last year, reaching 10,345 transactions in Catalonia. This was the best figure for a third of the year since 2007, the same year the historical series began and just before the real estate bubble burst. Across Spain, home sales increased, although less so in Catalonia, by 40.6%, with 62,808 transactions, also the highest volume in a March since 2007.

inflation deviates significantly from the 2% rate established by the European Central Bank (ECB). In April, the annual rate in the eurozone was 2.2%, the same as in March and lower than the 2.3% in February and the 2.5% in January. In Spain, it stood at 1.9% in May, according to the leading indicator published by the National Statistics Institute (INE). The Bank of Spain's latest bank lending survey highlighted that demand for credit, especially mortgages, will continue to rise in the coming months.

The monthly figure for May represents the second largest year-on-year drop in a fifth month of the year since records began, according to the Kelisto comparison tool. May's performance consolidates a downward trend that has pushed the Euribor down from the 3.680% level seen twelve months ago. All of this is putting pressure on the ECB, which has a meeting of its governing council next Thursday and could cut interest rates again. as it did in April when it set them at 2.25%..