With inflation at an all time low it appears that the Euribor, the interest rate which is used the most for fixing mortgage rates, will continue falling. At present it is 2.9% (0.40 points above the official interest rate of 2.5%) but all indications show that it could drop even further.
The Euribor has gone from 5.24% in October 2008 to 4.35% in November and 3.45% in December 2008. In January it was 3.025% and now it currently stands at 2.920%
The forecast for lower interest rates are promising due to the likelihood of the European Central Bank lowering the cost of borrowing further in an attempt to reactivate European economies. Some experts predict that the official interest rate set by the European Central Bank will fall to 1.5% which could mean that the Euribor could drop to 2%.
However, the mortgage market is continuing to fall. For example, new mortgages conceded by banks and building societies fell by 52% in November 2008 compared to the same month for 2007 according to figures provided by the Bank of Spain
The number of mortgaged properties fell by 33.
9% in October 2008 to 64,429 according to the National Institute for Statistics. This figure compared to September 2008 shows a fall of 1.1%. In addition the average amount for a mortgage fell by 10.4% compared to October 2007 to 135,202 euros. The total amount of capital lent by banks and building societies in October 2008 also fell by 40.7% compared to the same month in 2007.