Frequently Asked Questions

Euribor (Euro Interbank Offered Rate) is the average interest rate at which Eurozone banks offer to lend unsecured funds to each other, calculated daily for five different maturities: 1 week, 1 month, 3 months, 6 months, and 12 months. It serves as a crucial benchmark for mortgages, loans, and financial products across Europe.

Euribor rates change daily based on market conditions. As of the most recent data, rates have been around 3.5-4% for most terms in 2024, though this can change quickly. Check our Current Rates page for today's exact values across all five maturities.

Banks and financial institutions that lend funds at Euribor-linked rates earn interest payments from borrowers. When a mortgage or loan references Euribor (usually plus a margin), the lender collects interest based on the fluctuating Euribor benchmark plus their fixed markup. The European Money Markets Institute (EMMI) administers the rate but doesn't directly profit from its usage.

The 6-month Euribor rate represents the interest rate at which Eurozone banks lend unsecured funds to each other for a six-month period. It's one of the most commonly used reference rates for mortgages in several European countries, especially Spain and Portugal. When your loan references 6-month Euribor, your interest rate typically adjusts every six months based on the current 6-month Euribor value.

When loans or mortgages are tied to Euribor, fluctuations in the Euribor rate directly increase or decrease borrowers' payment amounts. For example, if you have a mortgage with an interest rate of "Euribor + 1%" and the relevant Euribor rate increases by 0.5 percentage points, your interest rate will also increase by 0.5 percentage points, resulting in higher monthly payments.

The 3-month Euribor is the reference rate for interbank unsecured lending over a three-month term, updated daily. It's widely used for corporate loans, floating-rate notes, and some variable-rate mortgages. When a financial product refers to 3-month Euribor, its interest rate typically resets every three months based on the current 3-month Euribor rate.

Euribor rates tend to follow the European Central Bank's (ECB) monetary policy decisions. Since 2022, the ECB has significantly increased its policy rates to combat high inflation in the Eurozone, which has directly pushed up Euribor rates. Other factors affecting Euribor's level include banking sector liquidity, market expectations for future interest rates, and broader economic conditions across Europe.

A "3 months interest free" offer is a promotional term where a lender or retailer charges no interest on a loan or purchase for the first three months. This is a marketing promotion and not directly related to Euribor. After the interest-free period ends, the standard interest rate (which might be linked to Euribor) typically applies to any remaining balance.

Euribor is administered by the European Money Markets Institute (EMMI), a non-profit organization based in Brussels. EMMI oversees the methodology, calculation, and publication of Euribor rates based on daily submissions from a panel of contributing banks. While EMMI manages the rate, it doesn't control the actual values, which are determined by market forces and the submissions from panel banks according to a transparent calculation methodology.

Future Euribor movements depend primarily on European Central Bank (ECB) policy decisions and market expectations. As of 2024, most analysts expect Euribor rates to decline gradually as inflation pressures ease, allowing the ECB to potentially cut interest rates. However, economic conditions can change rapidly, and forecasts are inherently uncertain. Previous trends are not reliable guides to future rate movements.

Euribor is calculated using a hybrid methodology that combines transaction data with expert judgment when necessary. Each business day, panel banks submit their estimates of the rates at which prime banks would lend funds to each other. The calculation process trims the highest and lowest 15% of submitted quotes and averages the remaining values. Individual consumers cannot calculate Euribor; it's determined through this official process and published by EMMI.

Central banks set key policy rates that influence the broader interest rate environment. In the Eurozone, the European Central Bank (ECB) sets several official rates including the deposit facility rate and main refinancing rate. Meanwhile, market-determined benchmark rates like Euribor are calculated by independent administrators (EMMI for Euribor) based on quotes from panel banks, reflecting actual market conditions rather than direct central bank control.

Financial institutions like banks, lenders, and investors earn money from interest rates. When rates rise, banks typically earn higher margins on loans, while depositors may receive better returns on savings accounts and certificates of deposit. Bond investors can benefit when they hold fixed-rate investments during falling rate environments. The overall impact on profitability depends on each institution's balance sheet structure and how well they manage interest rate risk.

For simple interest: Interest = Principal × Rate × Time (where rate is expressed as a decimal). For compound interest: Future Value = Principal × (1 + Rate/n)^(n×Time), where n is the number of compounding periods per year. For Euribor-based loans, the interest rate is typically calculated as the reference Euribor rate plus a fixed margin (e.g., 3-month Euribor + 1.5%). The total interest cost changes whenever the Euribor rate is reset.

There is no single global interest rate. Each country or monetary union has its own central bank that sets policy rates for its jurisdiction—the Federal Reserve for the US, the European Central Bank for the Eurozone, the Bank of England for the UK, and so on. Market-based benchmark rates like Euribor, SOFR, or SONIA are calculated based on actual lending transactions or bank submissions within their respective markets, reflecting local conditions rather than global coordination.