Six-month Euribor rate falls to new low after ECB rate cut

The Euribor rate rose this Friday by three and 12 months and fell by six months to a new low since June 7 last year, after the ECB cut key rates by 25 basis points.

With the changes this Friday, Euribor remained very close, but the three-month rate, which rose to 3.759%, remained above the six-month rate (3.735%) and the 12-month rate (3.701%).

The six-month Euribor rate, which has become the most used rate in Portugal for home loans with variable rates and which was above 4% between September 14 and December 1, fell this Friday to 3.735%, minus 0.009 points and a new low since June 7. , 2023, after rising on October 18 to 4.143%, the highest since November 2008.

Bank of Portugal (BdP) data for April indicates that the six-month Euribor rate is the most used, accounting for 37.5% of total floating rate homeownership loans. The same data shows that the 12- and three-month Euribor rates were 34.1% and 25% respectively.

For 12 months, the Euribor rate, which was above 4% between June 16 and November 29, rose this Friday to 3.701%, which is 0.017 points more than in the previous session, against the maximum since November 2008, 4.228%, recorded September 29. .

In the same sense, the three-month Euribor rate increased, settling at 3.759% plus 0.004 points, after increasing on October 19 to 4.002%, the highest since November 2008.

The ECB on Thursday cut key interest rates by 25 basis points after holding them at their highest level since 2001 for five meetings and making 10 hikes since July 21, 2022.

The next ECB monetary policy meeting will take place on July 18.

This reduction in key rates should lead to a moderate reduction in Euribor rates and thus a reduction in the provision of home loans.

The average Euribor rate fell in May for three, six and 12 months, but more sharply than in April and for shorter maturities.

The Euribor average in May fell 0.073 points to 3.813% in three months (compared to 3.886% in April), 0.052 points to 3.787% in six months (compared to 3.839%) and 0.021 points to 3.681% in 12 months (up from 3,702). %).

Analysts expect Euribor rates to reach around 3% by the end of the year.

More significantly, the Euribor began to rise on February 4, 2022, after the ECB acknowledged that it might raise key interest rates due to rising inflation in the eurozone, a trend that accelerated with the start of Russia’s invasion of Ukraine in February. 24, 2022.

Three-, six- and 12-month Euribor rates hit record lows respectively: -0.605% on December 14, 2021, -0.554% and -0.518% on December 20, 2021.

Euribor is set as the average rate at which a group of 19 eurozone banks are willing to lend to each other in the interbank market.