This period shows how interbank lending rates moved from -0.5% at the start of the year to 2.8% by November. The level is crucial because many variable-rate mortgages reference it. For a loan with 100,000 euros remaining, the rate shift means a swing from paying a negative 500 euros per year to 2,800 euros, which translates to roughly a 230-euro rise in monthly installments. That makes monthly payments noticeably more expensive. Even though the early months saw a quick climb, fixed rates remained around 2.5% to 3% until the European Central Bank set policy on further rate increases. The slower rise allows an assessment of the impact seen since the previous edition.
The debate about whether buying or renting is more practical on the streets is long-standing. There is no universal answer because it depends on a person’s financial situation, family dynamics or work arrangements. From a financial viewpoint, ownership can build a legacy rents cannot, yet renting offers greater flexibility and mobility.
The key question remains: which costs more each month, renting or buying? The latest Living Feature Telescope report prepared by EY Consulting suggests that purchasing is worthwhile for most Spaniards as long as a 20% down payment is saved face to face. Javier García-Mateo, partner responsible for Strategy and Real Estate Operations, notes that if Euribor stabilizes and does not resume its ascent, rents in Spain could fall by at least 11%, potentially boosting demand for one- to three-bedroom homes to favor renting in some cases (PAA insight: housing affordability, rent trends).
Another expert source, UVE Valoraciones, indicates that when mortgage payments are less than 15% higher than rent, renting can be more attractive. This threshold appears in major cities like Barcelona, Palma de Mallorca and A Coruña. While mortgage payments may appear advantageous, the biggest hurdle for first-time buyers remains saving roughly 28% to 32% of the purchase price. The report, issued today, advocates alternative measures to regulate rents by facilitating purchases through state guarantees, which could enable financing for more than 80% of the purchase price, addressing the financing gap for young buyers (cited for context).
A recent article notes a short-term uptick in rents over the last five years, driven by the economic strain from high inflation and greater household expenditures. The general guideline often assumed is that the effort rate, the share of income spent on rent or mortgage, should not exceed about 35% of income (cited for context).
Creating a legacy
Sergio Espadero, head of the consulting and valuation division at Tecnitasa, argues that there is no clear winner between buying and renting; each option depends on lifestyle and goals. From a financial and investment angle, paying a mortgage builds equity, and once the loan is repaid, a home remains that could, in theory, be sold for more than was invested. Looking at historical price trends, long-term appreciation has often doubled value over a 10- to 30-year horizon. In other words, housing investment is typically a mid- to long-term play; renting isn’t simply losing money—it’s a different strategy with its own merits.
Since the Civil War era, Spain has drifted toward ownership as a common model. Eurostat 2020 data show that only about a quarter of residents live in rental housing. The owner-occupied model remains a powerful part of a retirement plan for many middle- and lower-middle-class families. Some wonder whether mortgage payments rising by a few hundred euros could push people to relinquish their homes, but Espadero cautions that such a generalization would be unwise.
by region
The UVE Valoraciones study finds it costs roughly the same to rent as to carry a mortgage in Madrid, with rents and mortgage payments around 15.82 and 16.20 euros per square meter per month respectively. Yet the picture is different elsewhere among major cities: mortgage costs are about 14% lower in Barcelona, 37.5% lower in Valencia and 20.5% lower in Seville. The report notes that among the 20 most populous municipalities, only Barcelona and Alicante show an improving rent-to-price ratio, driven by sharply rising rents.
The share of municipalities where rents consume more than 75% of the rent is 71, representing 64% of the total as of November 2022; by November 2021 the share stood at 28.26%. Specifically, places where monthly mortgage costs exceed rent include San Sebastián, Getxo, Alcobendas, Palma de Mallorca, Sant Cugat del Vallés, Pozuelo de Alarcón, Marbella, Majadahonda, A Coruña, Rivas-Vaciamadrid and Pamplona. The takeaway is nuanced: it may be prudent to rent rather than buy in some of these locations, but each case requires individual assessment. What is clear is that fee growth has outpaced last year’s rent increases, underscoring regional dynamics in housing affordability.