The European Central Bank has signaled a rate increase up to 3.75 percent if the official price of the coin rises by 0.25 points. This marks a fresh blow for homeowners with variable-rate mortgages or for those currently shopping for a loan to buy a home. Markets initially hesitated with a slight dip, but this rate hike in the financial sector is generally seen as a natural step. Euribor is expected to remain on a roughly 4 percent trajectory, which adds pressure to household budgets across many families.
In Alicante, where the average mortgage hovers around 105,000 euros according to the latest INE data, residents facing a rate review will pay about 208 euros more next month compared with last year. If the rate were calculated against the minimum Euribor level from December 2021, the increase would reach 232 euros. In practical terms, this means roughly 2,800 euros more per year, highlighting one of the biggest burdens many households are currently bearing.
Considering the typical loan size, a 25-year term, and a 1 percent rate difference, the average mortgage holder could see payments exceed 600 euros from May onward. That amount is already becoming difficult for many homes to absorb.
As a result, many households are exploring ways to soften these increases. Options include partial debt relaxation, renegotiating loan terms with banks, or transferring the loan to a different lender, possibly through a remortgage to cancel the previous loan.
A building under construction in Benidorm, archive. david revenge
From the iAhorro portal, lenders currently guarantee up to 40 percent of operations, which already aligns with the second scenario. With customers seeking cheaper mortgages to escape harsher terms, the process is not easy for many workers.
Laura Martinez, a spokesperson from the comparator, notes that most fixed-rate loans signed recently carry rates around 3 percent. But those were negotiated a few months ago. Anyone seeking new offers today faces rates near 4 percent, she says. Regarding loan variants, differences have narrowed to below 0.5 percent, yet given Euribor’s current trajectory these options remain more expensive than their predecessors.
Demand for loans and mortgages plunges the fastest since the financial crisis
The market is tilting toward mixed mortgage structures as a practical alternative. One option combines a fixed-rate initiation period with a later phase that can range from three years to half the loan’s life. Martínez, who has popularized this approach, explains that shorter fixed tranches bring lower initial interest rates, sometimes around 2 percent in best cases, but such deals may represent roughly half of all transactions.
more demanding requirements
Beyond the economics, lenders have tightened the conditions for approving loans. Miquel Riera from Help My Cash notes that as borrowing costs rise, lenders scrutinize applicants more strictly. Stable employment, higher income, and the ability to repay the same amount without financing more than 80 percent of the property value become more important. In several cases, applications are rejected outright.
Latest INE data for January and February show 3,323 new mortgages in the Alicante province, an 8.5 percent rise from the previous year. Riera cautions that INE data comes from the Property Register and often reflects deals signed months earlier. He points to the latest figures from the Council of Notaries, which indicate a 26 percent drop in new housing loan signings nationwide, suggesting that the real situation may be closer to the broader national reality.
A premium difference up to 1 percent is possible for loyal customers. While Euribor has tightened overall credit conditions, falling demand has pushed lenders to compete more aggressively for borrowers considered reliable. Civil servants and workers in sectors with lower unemployment and higher incomes may see offers up to 1 percent lower than the general rate. For example, fixed-rate mortgages around 3 percent annual interest are among the favorable options available to a subset of borrowers, even as rates rise for the market at large.