Expert: Euribor Decline Below 3% Brings New Activity to Real Estate Market
The real estate market will receive its next positive boost when the 6-month Euribor, the most common reference rate in Estonian home loan contracts, falls below 3%, which would bring a clear financial gain to homebuyers, believes Helena-Laura Lesment, broker-consultant at 1Partner Kinnisvara.
"When families are planning their budgets, the expected monthly loan payment is under sharp scrutiny, and if it decreases by more than 100 euros compared to a year ago, for example in the case of a 150,000 euro loan over 30 years, then the difference is truly motivating," says Helena-Laura Lesment, noting that commercial banks have also lowered their margins on their own part over the past six months.
She acknowledges that forecasting is a thankless task, but more optimistic yet credible experts see the Euribor falling below the 3% threshold before next spring. "We must not forget that we are today at approximately the same point in terms of transaction activity as we were a dozen years ago. This means that accumulated demand has been building up over the past couple of years, and the key to real estate market activity growth remains tied to money prices, or rather home loan interest rates," believes Helena-Laura Lesment.
The feedback from brokers over the past six months has been relatively unanimous – many more interested parties have come in, but often the desired home remains just out of reach for buyers precisely due to the size of the home loan payment. "People are making an effort to find a solution, but there is still a slight shortfall. So either the monthly payment should fall or income should rise, and for greater peace of mind, of course both," Lesment sums up today's situation in one sentence.
