Euribor hits record low: what it means for you

The Euribor has hit yet another record low. The daily reference rate, which is published by the European Money Market Institute, is based on the average rates offered by Eurozone banks and is used to calculate mortgages offered to borrowers in a number of European destinations.

In the last year, though, the rate has continued to fall, repeatedly hitting record lows. At the end of 2014, the rate was 0.328 per cent, but it fell to 0.059 per cent by the end of 2015. It is now 82 per cent lower than 12 months ago.

The decline is a result of the European Central Bank's actions to try and stimulate the economy, with its record low interest rates and quantitative easing scheme both making the Euribor's drop possible.

What does this mean for you? In short, lower interest rates. Banks loosely calculate their mortgages by combining the Euribor rate with their own margin, which means there is a broad correlation between them.

The trend is forecast to continue in the near future. In fact, the Euribor has dropped so far that it is even expected to enter unprecedented negative territory, according to Juan Villén, head of mortgages at Idealista, although he predicts that the historic low rate will not go beyond -0.10 per cent.

José María Roldán, the head of the Spanish Banking Association (AEB), described the situation as "abnormal", unsustainable and likely to normalise as soon as possible.

Nonetheless, the record low rates mark a hugely positive start to the year for new borrowers and mortgage holders with revised rates.

"It's a great time to take advantage of the excellent conditions," says Villén.

It is not just Spain where borrowers have enjoyed the benefits of the abnormally low Euribor; in France, low mortgage rates have made the country's real estate more attractive than ever, with demand for French property climbing notably on TheMoveChannel.com in the second half of 2015.

"Property experts are predicting a favourable year," says French Private Finance, which cites a CSA poll for the Land Bank that found 67 per cent of property experts are optimistic about the country's market.

"Credit Agricole expect transaction volumes to remain high, although slightly down" adds the mortgage broker.

"2016 could be the year to pick up a bargain or two. "