Euribor: What is it?

Euribor

Is an abbreviation of the European interbank offered rate, is an important term in the financial world that affects many people and businesses. This article explains what exactly the Euribor is and how it can affect the interest rates on your loans. We will dive deeper into the complexities of this topic and try to understand how Euribor can be both perplexing and bursty, but also specific and contextual.

Current Euribor values

2023-09-22
Week3.875
1 month3.872
3 months3.958
6 months4.082
12 months4.213

Euribor 2023 graph

Types of Euribor

The Euribor is not a single interest rate, but has several different periods, for example:

1 week Euribor

The 1-week Euribor is used for short-term transactions.

1 month Euribor

The 1-month Euribor is a short-term interest rate that reflects the level of deposits in euro over a one-month period. It is a useful indicator for assessing short-term liquidity.

3 month Euribor

The 3-month Euribor gives an overview of the interest rate that loan agreements with banks take into account for a three-month period. It is a common benchmark for many consumer loans and mortgages.

6 month Euribor

The 6-month Euribor reflects the interest rate on which six-month contracts are based. It is an important indicator for long-term loans and investments.

12 month Euribor

The 12-month Euribor takes into account deposits and loans lasting a full year. This is an important reference for the valuation of long-term loans and deposits.

Euribor values are constantly changing according to market conditions and central bank policy.

What is Euribor?

Euribor is the interest rate published daily by Europe's largest commercial banks to reflect the normal interest rate that banks lend to each other in euros. It is one of the main interest rates in Europe and has a major impact on financial markets and the economy in general.

Euribor.ee
Euribor.ee

How is Euribor calculated?

The Euribor is calculated taking into account transactions with several major European banks. On a daily basis, these banks announce the interest rates at which they are willing to lend money to each other. The Euribor is calculated as the average of these transactions. This process is highly regulated and monitored to ensure a fair and accurate interest rate.

Why is Euribor important?

The Euribor affects many financial instruments and transactions. This is important for the following reasons:

  1. Loans: Many loans, including mortgages and business loans, have an interest rate linked to Euribor. For many mortgages, interest rates and interest rates on loans are linked to interest rates.
  2. Investments: investment funds and other financial instruments may be linked to movements in Euribor. Investors may be affected by the movements in the Euribor market.
  3. Economic Stability: the Euribor is an important indicator of economic stability. It is a key indicator of stability in the euro area. If it rises sharply, it could affect the banking system and the wider economy.

Types of Euribor

The Euribor is not a single interest rate, but has several different periods, for example:

How does Euribor affect your loans?

Now that we have understood what Euribor is and what types it is, let's look at how it can affect the interest rates on your loans.

Imagine you have taken out a mortgage loan with an interest rate linked to 6-month Euribor. This means that your interest rate on the loan changes every six months according to the movement of the 6-month Euribor. If the Euribor rises, so will your interest rate, which means higher repayments.

But if Euribor falls, you could get a cheaper borrowing rate and therefore lower loan payments. This makes Euribor an important factor for borrowers who want to keep an eye on their borrowing rates and keep costs under control.

Euribor and banks

Euribor also affects banks. Banks use Euribor to calculate the base rate they use when lending to customers. If Euribor rises, the cost of lending for banking institutions will also rise, which could affect their profitability.

Euribor and investing

Euribor can also offer investors investment opportunities and risks. For example, they can invest in instruments whose returns are linked to Euribor. If the Euribor rises, it may increase the return on their investments, but if it falls, the return may fall.

Euribor forecast

Euribor forecast: what lies ahead for the European interest rate landscape? We examine future trends and their impact on financial markets.

Summary

Euribor is an important interest rate in European financial markets, affecting borrowers, investors and banks alike. Understanding it and monitoring its impact can help you make better financial decisions.

Hopefully, this article has helped you to better understand Euribor and its role in the financial world.

Questions and answers about Euribor

  1. Has Euribor always been the main interest rate in Europe?
    • Not always. Before the introduction of Euribor, the EONIA (Euro Overnight Index Average) was one of the most widely used interest rates.
  2. How does Euribor differ from other interest rates such as LIBOR?
    • Euribor is based on transactions made by European banks, while LIBOR (London Interbank Offered Rate) is based on transactions made by London banks.
  3. Does the Euribor rate depend on the ECB?
    • Not directly. The Euribor is based on transactions in the banking sector, but may be influenced by European Central Bank policy.
  4. How can I find out which Euribor rate applies to my loan?
    • Your lender should regularly inform you of the Euribor rate that applies to your loan.
  5. Can Euribor ever go negative?
    • Yes, Euribor can be negative, especially for short-term periods. This means that banks pay each other interest for lending.
  6. What did the Euribor 2021 graph and the Euribor 2022 graph look like?

Share with