The rise in interest rates has become a focal point for many households. Following the European Central Bank’s first announcement, the Euribor moved higher and now sits at a level well above 2 percent. This shift directly affects loans tied to variable rates, demanding greater payments from families with such mortgages. Notably, since last April, the one-year Euribor has left the negative territory it held for six years, signaling tougher times for borrowers whose loans recalibrate annually.
Although increases are common, the impact on each mortgage varies. Experts from Idealista emphasize that the outcome depends on when the contract was signed and how much has already been repaid. Many variable-rate loans in Spain use a French amortization system, where the monthly installment remains the same for the year. In the early years of the loan, most of the payment goes toward interest, with a smaller portion reducing the principal.
More time, more capital
As time passes, however, the balance shifts. In practice, only the capital portion tends to be reduced in later years of a long loan. This dynamic helps explain why the Euribor increase does not affect every mortgage identically. A contract from 2021 will behave differently from one signed in 2005, given the changing structure of payments over time.
Idealista’s analysts have laid out a theoretical estimate of the extra cost that households may face when updating loans to reflect the current Euribor. Their scenario uses an average mortgage of 150,000 euros with Euribor plus 1.5 percent and a 25-year term, assuming no early repayments. The calculation illustrates how the burden can vary depending on the signing year.
For example, borrowers who secured a variable-rate loan in August 2021 might see an approximate monthly increase of 118 euros, equating to about 1,421 euros during the year. Those who took out their loan in 2018 could experience an uplift near 104 euros per month (about 1,245 euros yearly), while contracts from 2005 may reflect a rise closer to 44 euros per month (around 528 euros annually).
In parallel, the real effect of a rising indicator is best understood by examining fixed-rate loans. In recent years, fixed-rate mortgages have become a popular hedge against future currency movements, offering more predictable payments even as Euribor fluctuates.