Euribor Forecast for 2023 (UPDATED)

Undoubtedly, one of the most significant financial news items of the year is the rise in the Euribor and the increase in medium-term mortgages.

In this article, we will answer basic questions that will help to better understand the upward trend and how it affects Spanish mortgages.

What is the Euribor?

EURIBOR is an acronym for Euro Interbank Offered Rate.

That is, an interest rate set by banks to lend money to each other; therefore, it is the main benchmark indicator used to establish the conditions of a variable-rate mortgage and also indirectly affects fixed-rate mortgages, which are also affected depending on the evolution of variable interest rates.

Who calculates and sets the Euribor?

The entity in charge of calculating and officially publishing the Euribor is The European Money Market Institute (EMMI).

How is the Euribor calculated?

The calculation of the Euribor as an interest rate is performed daily and has several defined terms: one week, one month, 3, 6, and 12 months. In Spain, the one that affects variable-rate mortgages is the 6-month Euribor.

What aspects influence the calculation of the Euribor?

The monetary policy followed by the European Central Bank is what determines the fluctuation of this interest rate.

Why has the Euribor risen?

The Euribor had been trading in negative territory since 2014, but due to the rampant inflation in Europe, the European Central Bank has implemented new policies aimed at controlling it, so it has had to raise interest rates and tighten monetary policies, which has inevitably caused the Euribor to rise.

So far, the Euribor has come close to 3%, which, on the other hand, has usually been the historical average rate prior to the paradigm shift adopted by the ECB in 2014. Beyond this note, the Euribor ended November with a monthly average of 2.87% and touched the historical highs of the last eight years. Something that makes mortgages continue to become even more expensive. It is worth mentioning that so far this year, these loans have become more expensive by about 3,000 euros per mortgage per year.

How does the Euribor affect the calculation of mortgages?

The Euribor has a direct implication on the evolution of the real estate market, since, if it rises, variable-rate mortgages increase their installments and vice versa.
In addition, the Euribor indirectly affects fixed-rate mortgages since the offer is determined by the evolution of variable rates. Therefore, when we talk about a variable-rate mortgage, we know that the interest will not be fixed, and that it will depend on the evolution of the Euribor, which has been increasing since April 2022 and with a value higher than 2.8% since November.

What is the Euribor forecast for 2023?

As we have explained previously, the fluctuation of the Euribor will depend on the policies adopted by the European Central Bank.

Due to the trend in the market, at least a couple of increases are expected at the beginning of 2023, and in the second half of the year, a stabilization is expected to begin to fall at the beginning of 2024.
Even more specifically, some reference sources indicate that the Euribor will be around 4% in December 2023 and 2.2% at the end of 2024.
However, everything will depend on how the market behaves, inflation, and the policies that the ECB finally adopts.

Remember that, if you are thinking of changing your mortgage from variable to fixed, a new appraisal of your home is necessary. This will allow you to go to any bank and thus be able to compare and get the most favorable conditions. You can request your appraisal by clicking here

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