Interest rates continue to fall, Tuesday is borderline laundry day

Finland the most used mortgage reference interest rate, the 12-month euribor, continues to fall. The reference rate was quoted at 2.393 percent on Tuesday. Compared to a year ago, the interest rate has already dropped by almost 1.7 percentage points.

It means the breaking of another threshold, as the one-year euribor has not fallen below 2.4 percent since October 2022.

The reference interest rate has dropped significantly in the early days of the week. As recently as Friday, November 22, the one-year euribor was quoted at 2.489 percent. On Monday of the current week, it fell to 2.416 percent and now on Tuesday again to new lows.

On Monday, it was estimated that the purchasing managers’ indices published on Friday were behind the decline in reference interest rates, which indicated that economic growth in the euro area was slower than expected in both services and industry.

Nordea’s chief economist Jan von Gerich says on the message platform X that the market will continue to price the base of the Euribor for the year at around two percent next year.

Tuesday new thresholds were also crossed in shorter euribor rates. The three-month Euribor was quoted below 2.9% for the first time since March 2023, and the six-month Euribor below 2.7% for the first time since December 2022.

Tuesday’s reading of the three-month Euribor was 2.898 percent and the six-month Euribor was 2.676 percent.

The three-month Euribor saw quite a sharp drop on Tuesday, as it was still quoted at 2.985 percent on Monday. The daily bill will therefore be almost 0.09 percentage points.

It is the largest single daily drop in the three-month Euribor this year.

Home loan about a third of Finnish households have it. In euro terms, at the end of September, Finnish households had just under 106 billion euros in mortgage loans.

After a long period of zero interest rates, the general interest rate began to rise strongly in 2022, when the European Central Bank (ECB) began to tighten monetary policy strongly to curb inflation that was clearly faster than its target, i.e. the general rise in consumer prices.

The Euribor reference interest rates were at their highest around four percent at the end of 2023, but have clearly decreased this year.