Euribor remains the benchmark for many variable-rate home loans across Europe. This year, its average moved up by roughly three-tenths of a percentage point each month, totaling about 3.48 percentage points. That climb marks the steepest yearly rise ever recorded by the index, pushing the December 2022 average to just over 3.0%. For borrowers in regions where Euribor drives payments, this trend translates into noticeably higher monthly costs for new and existing adjustable-rate loans.
What does that mean in practical terms? With current lending mixes around 2.5% for standard fixed-rate offers and Euribor hovering a little above 3%, the burden falls most on homeowners and prospective buyers. Consider a variable-rate mortgage of €150,000 amortized over 30 years with a margin of 0.99% added to Euribor. Under this scenario, monthly payments would rise from about €448 to roughly €706, an increase of €257.93 each month. Annually, that compounds to around €3,095 in extra payments after the adjustment, a significant delta for household budgets. For a €300,000 loan under the same terms, payments could jump from about €896 to €1,412 per month, an added €515.86 monthly and roughly €6,190 per year.
Housing loans look set to be pricier into 2023
The upward shift in mortgage costs began in earnest in the second quarter of 2022 and shows no immediate sign of reversing. Mortgage professionals note that many borrowers will see their rate reviews occur in the first half of 2023, resulting in higher monthly payments. The driving force remains Euribor, which accelerated more sharply after mid-2022 compared with the pace earlier in the year. In forecasts from multiple market watchers, the baseline is seen around the 3% mark for Euribor in 2023, with the expectation that rates will rise, then ease slightly, rather than jump back toward earlier peaks. A spokesperson for a prominent mortgage comparison service cautions that a jump to 4% during 2023 is unlikely, given the recent slowdown in the curve toward the end of 2022 and what that may imply for 2023.
For buyers, mortgage affordability is a central concern. Lenders continue to see mortgages as a key product to attract customers, and competition among banks is likely to influence the offers available. The level of demand for new mortgage applications will be a major driver for pricing dynamics. When demand is strong, banks are more inclined to compete on rates and terms; when demand softens, pricing tends to tighten. In practice, this means that some borrowers may see improvements in bids, while others may not, depending on individual credit profiles and market conditions.
Some banks are highlighting hybrid mortgage options as particularly competitive. While fixed-rate loans remain a staple for certain borrowers, hybrids can offer attractive blends of rate stability and potential savings, though they are not universally available or suitable for every borrower. Overall, the market shows continued variation among lenders, with some portfolios featuring more flexible refinancing paths than others.
Rates may ease from 3% but are unlikely to reach 4%
Even as central banks have moved to tighten policy, inflation shows signs of cooling gradually, which tempers the pace of rate increases. The European Central Bank has raised rates multiple times since mid-2022 and signals a slower trajectory ahead. The objective remains to bring inflation toward a 2%–3% target, but the path is not perfectly linear. Analysts expect Euribor to hover around the 3% region through much of 2023, with occasional fluctuations that could nudge rates higher on episodes of renewed price pressures. A cautious view is that fixed-rate mortgages at or around 3% will be competitive for solid borrowers, while more elevated rates might appear for those with riskier profiles or higher loan-to-value ratios. The core point: a return to 4% is not anticipated as a baseline, unless inflation accelerates sharply again.
From a lender perspective, the next year could resemble a three-phase pattern: Euribor at about 3%, general rates around 3% for well-qualified borrowers, and fixed-rate offers hovering near 3% for favorable applicants. For others, rates in the mid-range, around 3.5%, might emerge later in the year. The practical takeaway is that fixed mortgages will continue to be offered, but the market will favor hybrids and variable structures for many borrowers seeking balance between payment stability and overall affordability.
Across the market, there is heightened interest in refinancing as homeowners reassess their mortgage terms. This ongoing recalibration reflects the interplay between lender competition, borrower demand, and evolving macroeconomic signals. As a result, households may find opportunities to adjust their financing strategy, whether through rate reviews, product switches, or new application activity. In all cases, the emphasis remains on aligning monthly payments with long-term affordability and personal financial goals. (Attribution: iAhorro mortgage insights)