Expert: Next Year Euribor Could Break Below the 3% Mark
Over the next year, Estonia's most commonly used base interest rate for home loans, the six-month Euribor, could fall below 3% and reach around 2.75% by the end of 2025, predicts Jonna Pechter, head of Bigbank Estonia and an active small investor.
According to Pechter, the European Central Bank's interest rate cut decision that arrived in June took half a year to materialize, but now at least the movement is in the right direction. "When I look at the expectations prevalent in the money market, there could be several interest rate cut decisions over the next year or two," comments Pechter.
However, according to the bank chief, inflation in Europe has not yet been brought fully under control, and this could significantly slow down processes similar to what has happened in the last six months. "Some forecasts have suggested that by the end of next year, interest rates could fall even below 2.5%, but I don't share such optimism and rather we might reach that a year later. Of course, we all hope that borrowing would be cheaper, but I make my investment decisions based on rather more conservative forecasts," says Pechter and emphasizes that this is his opinion and he is not calling on anyone else to act according to it.
"What is clear is that the lower Euribor moves, the easier it is for people to take out loans and at the same time the more difficult it is for them to get decent returns on their savings. One thing is certain – we shouldn't expect the times of free money to return," concludes Jonna Pechter on the expected Euribor trends.
