Do you already know what are the Euribor Rates?
Euribor is the purchase price that a bank pays for short-term loans
The term Euribor stands for Euro Interbank Offered Rate. Euribor rates are based on the average interest rates charged on interbank loans in euros for around 25/40 banks in Europe. In these loans can be applied several deadlines: from one week to twelve months.
These rates are considered to be the base rates for all types of interest rate products, such as swap interest rates, future interest rates, savings accounts and mortgage loans. For this reason, Euribor rates are closely watched by both professionals and individuals.
There are altogether 8 different Euribor rates (there were previously 15). In addition, there is also a one-day interest rate, which is called Eonia. This term stands for Euro OverNight Index Average. The Eonia rate is the rate of interbank interest rate the Euro zone with the period of one day.
Basically, the Euribor is the interest rate against which a large number of European banks provide short-term interbank lending. Banks that lend money from other banks may in turn use this money to lend to other banks. In other words, the Euribor is considered as the purchase price that a bank pays for short-term loans.
Another method used by banks to attract money is to encourage customers to do savings accounts. A person who opens a savings account and saves money in a savings account is actually lending money to the bank.
The level of the Euribor rate and the interest rate of the savings account assigned are strongly related to each other. However, the savings account interest rate attributed to savers is often lower than the Euribor rate. This difference is "the margin for the bank". That is, the Euribor is an excellent indicator of the direction of the savings rates.
Graph Source: Global Rates