Falling Euribor and mortgage rates signal rising demand for family homes

Euribor is the Eurozone interbank reference rate, set based on offers provided by central banks within the European banking system. It reflects interbank lending rates and influences general interest rate levels. Many mortgages are tied to Euribor, which means changes in the rate directly affect mortgage costs. The 12-month Euribor variant is the most commonly used reference rate for mortgages. According to Danske Bank’s Head of Retail Financing, Sari Takala, Euribor changes this year will positively affect mortgages, with some borrowers seeing lower repayment costs by the end of March. 

Falling mortgage rates point to growing demand for family homes

Over the past three months, the 12-month Euribor has dropped by about 0.6 percentage points. For a 300,000 € loan, this translates to a saving of 150 € per month, or 1,800 € per year. Talouselämä uutisoikin Finnish business magazine Talouselämä reported that inflation in Finland is now driven mainly by interest rates, with the 12-month Euribor falling to 3.513% at the end of December 2023. Jukka Rantanen, CEO of Sp-Kodit, and Henna Mikkonen, Chief Economist at the Savings Banks Group, predict that prices of used homes will rise in 2024 and transaction volumes will increase by 15% compared to 2023. Meanwhile, Kauppalehti reports that households’ financial situations will ease as real incomes improve—salaries in 2024 are rising compared to the previous year while costs are falling. .   

The shortage of family homes continues

As Euribor declines, mortgage rates fall, making mortgages more attractive. Lower borrowing costs boost demand for family homes, as households are more motivated to purchase new properties.  

In 2023, housing construction starts fell sharply. In family housing (single-family, row, semi-detached, or detached homes), thousands of homes went unbuilt in Finland, creating a significant shortage that will only grow this year. Based on this data and forecasts, we at Olas believe 2024 will see a strong increase in demand for family homes.    

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Financially strong Olas continues steady growth

While many competitors have seen declining sales in a challenging market, at Olas the opposite has happened: in 2023, we grew our revenue by 25%. Read more on our website or in Kauppalehti!