Yearly Euribor Surpasses 3% for First Time in Nearly Two Years

The 12-month Euribor, the benchmark interest rate for many Finnish home loans, has climbed above 3% for the first time in almost two years. The rate reached 3.003% on Friday, a slight increase from 2.990% on Thursday.

The last time the rate exceeded 3% was on September 6, 2024, when it stood at 3.026%. At that time, rates were on a downward trend, but now there are concerns about a renewed increase.

Interest rate derivatives suggest no significant immediate rise is expected, with the 12-month Euribor projected to hover around 3.16% in a year. However, the situation is volatile. Rising oil prices, fueled by escalating tensions in the Middle East, are the primary driver behind the current rate hike. Since the outbreak of conflict involving Iran, rates have already climbed by 0.8 percentage points.

Senior market economist Jari Hännikäinen noted that while much uncertainty surrounds future rate developments, the steepest increases may already be behind us. The trajectory will largely depend on the unpredictable geopolitical situation. If energy prices continue to climb, Euribor rates could surpass current futures pricing. Conversely, peace in the Middle East and falling energy prices would quickly alleviate inflation concerns and push Euribor rates down.