In the latest episode of the podcast "Economy360°" we discuss everything related to the interbank lending rate Euribor. Another important question: how much cheaper will housing loans become in the future? /nginx/o/2024/08/29/16321812t1hb8cb.jpg)
Grigory Ilkevich. Photo: Daniel Gilman
In the latest episode of the podcast "Economy360°" we discuss everything related to the interbank lending rate Euribor. Another important question: how much cheaper will housing loans become in the future?
People are fed up: the high Euribor has been a pain in the neck for years. It seems to have started to fall, but somehow sluggishly. And we want it to be zero again. And for mortgage interest to return to pre-Covid levels.
The guest of the podcast is Grigory Ilkevich, an investment specialist, founder of a closed investor club, and former head of retail banking at Luminor.
First, let's get the terminology straight. Euribor (or Euro Interbank Offered Rate) is the European average interbank lending rate. In other words, the interest rate on mutual unsecured loans.
It is important to understand that the interest rates on loans offered to bank clients, as a rule, include the bank margin and the Euribor rate for a certain period, notes Grigory Ilkevich.
The interest rates paid on deposits also depend on the fluctuations of the Euribor.
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At its peak in 2023 (mid-October), the 12-month Euribor rate exceeded 4.1%. And that's not the limit: the highest rate in history was recorded in the winter of 2008 – almost 5.5%.
It is also quite understandable why many are nostalgic about the zero Euribor: in the past, its rate remained negative for seven years.
Housing loans in many countries were given out at that time at such tasty interest rates that it still makes your mouth water.
The 6-month Euribor recently fell below 3.4 percent again . The 12-month Euribor has fallen particularly sharply, to 3.1 percent. The last time the 12-month Euribor fell to such a level was at the end of 2022.
What does all this mean for businesses and retail borrowers?
"I have positive news: very good times lie ahead. Let's hope that things won't get any worse," says Grigory Ilkevich.
“In the context of finance and the economy, things should get easier, because we have already defeated inflation and have not fallen into recession or depression,” he believes.
"When interest rates start to fall, money becomes cheaper, there is more of it on the market. Thus, you can calm down about the future, take out loans and make investments again," explains Ilkevich.
What else do we talk about in the podcast?
- What does the Euribor rate depend on, and what is it determined on the basis of?
- How does the change in the Euribor rate affect the economy and everyday life?
- What does a negative Euribor mean for a borrower?
- To what extent do bank interests in mortgage loans directly depend on Euribor?
- Is it worth taking out a housing loan today, or is it better to wait and see?
- For the faint of heart: why not negotiate a fixed rate with the bank?
More details in the latest episode of the podcast "Economy360°".
Music used in the podcast: Keep Calm and Podcast – Step To The Beat.
Economy, finance, investments, taxes, new technologies and innovations in business, employee search, legal issues, crypto assets, security – we talk about all this and much more twice a month in the podcast “Economy360°” on the portal rus.postimees.ee.
