Mortgage rates are falling – should you lock in a fixed rate or stick with a tracker now?

Spring is traditionally the busiest time for the housing market, and this year there's more than the usual amount of excitement in the air. Many people are now wondering what will happen with their mortgage rate. The long period of rising rates has finally broken, and mortgage rates have clearly started to fall. This will, of course, please both those dreaming of a new home and those renegotiating their existing loans.

Euribor has turned – what's next?

When you talk about Finnish mortgages, you inevitably talk about Euribor. In recent months, the 12-month Euribor in particular has been in the headlines, and now it has clearly fallen from its peak. Analysts are cautiously optimistic: many expect the European Central Bank to continue cutting its key interest rate, which will also push longer-term benchmark rates down. This means that repayments on a variable-rate loan could become cheaper in the coming months.

Is the fixed-rate mortgage making a comeback?

When rates were rising, the fixed-rate mortgage almost completely disappeared from the map. Now that the peak has passed, some banks are once again offering fixed rates at more attractive levels. Is it a sensible option today? It depends entirely on where you think rates are heading. If you believe they will continue to fall, a variable rate is cheaper. But if you want certainty and peace of mind without any nasty surprises, a fixed rate could be your lifeline – especially now that offers are starting to reappear.

Choosing your benchmark rate isn't trivial

When negotiating with a bank, you'll come across the term benchmark interest rate. This is the base to which the bank adds its margin. The most common options are the various Euribor rates (1-month, 3-month, 12-month) and the bank's own prime rate. Euribor rates fluctuate with the markets, while the prime rate moves more slowly. In the current market climate, a loan tied to Euribor will react faster to a fall, but it could also turn upwards just as quickly if the economy surprises.

• 12-month Euribor: The most popular benchmark rate, reset once a year. Offers predictability, but doesn't necessarily catch every small fluctuation.
• 1-month Euribor: More sensitive to market changes, can fall faster, but also rise faster.
• Prime rate: Controlled by the bank, changes infrequently. Suitable if you want stability and don't want to constantly watch the news.

Calculators can help – try one yourself

Just reading the news isn't enough, because every borrower's situation is unique. This is where an interest rate calculator comes into play. Many banks and brokers offer online tools that let you see the impact of different rates on your own affordability. For example, the EMI Laina interest rate calculator is easy to use: you enter the loan amount, the repayment term, and an estimate of the benchmark rate, and you'll immediately see your monthly payment. It's worth getting to grips with one before you go to the bank to negotiate – you'll then have a rough idea of what to expect.

This spring's situation is historic in many ways. Mortgage rates are falling, but nobody knows how long it will last. The best tactic is to prepare for different scenarios. If you already have a loan, now might be a good time to shop around for a better deal and check your margin. If you're buying your first home, don't be fooled by low rates – run the numbers based on both the current rate and one that's a couple of percentage points higher. That way, you'll sleep soundly, even if the markets are volatile.