Euribor seems to be undergoing a downward spiral reaching an all-time low each month. This fact leads to a constant discount regarding mortgages. Last month Euribor closed at -0,069%, which meant that it was the ninth month of constant negative figures. November 2016, continues to be an all-time low month. Therefore, we can assume that Euribor will have ten consecutive all-time low months. What makes Euribor index spiral out of control month after month? How long will this continue?

90% OF SPANISH MORTGAGES

Euribor is the main point of reference concerning mortgages. In Spain it accounts for 90% of the mortgages, therefore, the price is directly related to Euribor index. The European Central Bank is responsible for the downward spiral of Euribor due to its current policy of encouraging loans among banks. At present, the market is suffering financial instability as well as uncertainty, a fact which does not help the recovery of Euribor. In 2008, just before the real-estate bubble burst, Euribor had reached 5,52 a figure only broken in 1994 with an all-time high of 6,6%. The index decreased with the housing bubble and it dropped constantly except in 2011 when it increased slightly. However, 2011 was only a delusion because since then it has not stopped falling. And thus, we have reached the current situation: Euribor with negative index.

NEGATIVE INDEX: NO LIGHT AT THE END OF THE TUNNEL

All financial analysts state that Euribor will close with a negative index at the end of 2016. The record has been broken regarding all-time low forecasts. Nevertheless, this strong and constant drop has caught everybody unawares.When will this situation change for the better? Nowadays, nobody dares to make predictions and even less put a date for it to end. What seems clear is that in the next years Euribor index will continue being all-time low. Only the European Central Bank can change the situation. The only thing we can strongly stress is that now is the ideal and optimum time to invest in housing. We must take advantage of the favourable circumstances related to the buyer.

Picture 02: Philip Taylor