A notable rise in Euribor has occurred over the past two years, driving a sharp increase in variable-rate mortgage payments. These loans rely on Euribor averages published each month to set interest rates. When Euribor dips below zero, borrowers with variable mortgages could see their payments climb over time. By late 2023 the benchmark pushed above 4%, and calculations from the mortgage comparison and advisory service iAhorro show increases of up to 8,000 euros for some borrowers in the last two years.
Variable mortgage contracts may be amended on a quarterly, semiannual, or annual basis, depending on the financial institution and the terms agreed. The most common arrangement is annual reviews, but semiannual reviews are increasingly common, according to information from iSavings.
October is the worst month for mortgage holders, according to the yearly review
For borrowers with annual review schedules, figures from 2021 showed only gradual increases in installments. Calculations from the mortgage comparator indicate October 2023 as the month with the largest price jump, driven by Euribor reaching a 15-year high of 4.160%. Those whose review occurred in that month faced a larger increase than those who reviewed earlier in the year.
Consider a hypothetical borrower who secured a loan of 150,000 euros with Euribor at the 30-year term and a spread of 0.99%. The initial payment in October 2021 was 449.18 euros under annual review. By October 2022, with Euribor rising past 2% (2.233%), the first annual review produced a payment of 643.37 euros. A further rise occurred in October 2023, when Euribor hit a record high and the payment climbed to 801.57 euros. Across two years, this means a cumulative monthly increase of 351.93 euros and a total extra interest of 4,223.16 euros for that borrower.
Higher loan amounts translate to larger increases. A variable loan of 300,000 euros follows the same pattern: starting around 899.28 euros, rising to 1,350.26 euros in the second year, and reaching 1,603.14 euros in 2023. The outcome is an accumulated extra monthly cost of 703.86 euros and total additional interest of about 8,446.32 euros over the two-year period.
To explain the impact of different review frequencies, Simone Colombelli, who manages mortgages at iAhorro, notes that rising Euribor affects installment costs first for borrowers with semiannual reviews. The reason is that the fee is adjusted more often—twice a year—compared with annual reviews. Despite this, the overall difference between the two review frequencies is not dramatic in broad terms.
Borrowers with semiannual reviews often see the largest increases when reviews occur in April and October
Borrowers who signed variable mortgages under a semiannual review pattern around April 2021 experienced significant installment increases by October 2021 and again in April 2022, reflecting the twice-yearly adjustment. A 150,000-euro loan set at 0.99% over 30 years would have risen from 449.18 euros to about 786.81 euros under semiannual reviews, with an accumulated extra monthly amount of roughly 337.64 euros and around 4,051.63 euros in additional interest over two years. If the mortgage amount were 300,000 euros, the increases could double, leading to monthly payments around 675.27 euros higher and total additional interest around 8,103.25 euros in the same period.
To help explain the difference between an annual versus a semiannual review, Colombelli emphasizes that when Euribor trends upward, those with semiannual reviews feel the impact sooner due to more frequent adjustments. While the monthly increments can be steadier under semiannual reviews, the overall effect on long-term costs is usually similar. The important takeaway is that rising Euribor translates into higher payments for variable-rate borrowers, with the timing of reviews shaping when those increases occur.