THERE WAS good news for mortgage holders last week after the Euribor interest rate index fell for the first time in two years in Portugal.
The fall, which will affect new home loans, and non-fixed mortgage loans, is not considered by analysts to be very significant, but could pave the way for a further fall in interest rates in the coming months.
The average Euribor in October stood at 4.663 per cent, almost 0.10 of a percentage point fall on September’s value which was 4,751 per cent.
Using a base calculated on 365 days (used by most banks in Portugal) the Euribor for the six months to October registered 4,728 per cent and in September stood at 4,817.
Last week the six-month Euribor index closed at 4,606 per cent on Thursday last week, while the 12 month Euribor closed at 4,599 per cent.
Strong interest rate valuations since August were caused mainly by the sub-prime financial crisis in the United States.
As a result of that crisis, Euribor rates – fixed by a group of Euro Zone banks and influenced by charges made to individual banks from borrowing and lending money to each other – were higher than reference interest rate guidelines fixed by the European Central Bank which stands at around four per cent.
At the moment, the vast majority of market analysts believe that the European Central Bank cannot justify increasing interest rates again this year, while some more optimistic analysts believe that there is some justification for a cut in the cost of borrowing money in early 2008.
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