Interest rate drop could mean savings for owners

SPANISH property owners who took out a mortgage a year ago may be in for savings this year thanks to falling interest rates.

The Euribor, an index used to calculate interest rates for 95 per cent of mortgages in Spain, ended the month of February at a historical low of 0.25 per cent, meaning those that took out mortgages a year ago could save around €156 on repayments this year.

Over the last 12 months, the index has dropped almost three points, meaning for a mortgage taken out in February 2014 for approximately €100,000 to be repaid over 25 years, monthly payments would be reduced from €356 to €343, a €13 per month saving.

The Euribor index, calculated by the European Bank Federation using data from the main groups in the Eurozone, shows annual changes in the value of money in the European banking market and is the main reference for variable rate mortgages.

The index revolves around the fluctuations approved by the European Central Bank, which at a meeting last September reduced interest rates to a historical minimum of 0.05 per cent, which have not been changed since.