The trend has changed
Buying a home remains a challenging decision in a market where loan costs are volatile. With Euribor around 4.18 percent and the European Central Bank continuing to adjust rates, applicants face uncertainty about how much interest they will pay on a mortgage. Over time, the indicator has climbed, moving from 2.629 percent to current levels that show little sign of retreat from the previous year, even dating back to June.
Price growth adds another layer of pressure on mortgage affordability. A mix of factors has pushed housing prices higher, and those forces have converged to create substantial borrowing costs. Typically, a mortgage is the main payment method, which makes choosing the right loan especially critical. In this context, three mortgage structures are commonly considered: fixed, variable, or mixed. Among these, one option stands out for many borrowers in Spain.
The trend has changed
Traditionally, variable mortgages were preferred in Spain, but in recent years buyers shifted toward fixed-rate loans. The rise of Euribor altered this pattern. Marcel Beyer, director of iAhorro, explained which type is most commonly taken out now: the hybrid mortgage, which blends fixed and variable features, rose to prominence and even surpassed the fixed mortgage in popularity by late 2022.
Hybrid mortgages combine elements of both approaches. In practice, borrowers often choose a fixed rate for an initial period and then transition to a rate tied to Euribor plus a small margin. This appeals to buyers who expect Euribor to decline in the future and want predictability early on.
In November last year, a noticeable shift appeared in corporate trends. That month, 24.14 percent of Spaniards opted for a mixed mortgage, while 66.21 percent leaned toward fixed and variable components in combination. The share of mixed mortgages rose further through December and continued increasing, reaching roughly 73.10 percent by August of the following year.
Why are these mortgages successful?
The first fixed portion of a hybrid mortgage typically lasts many years, often between five and fifteen. It offers a very low nominal interest rate compared to a fully fixed loan, and the second phase is designed so Euribor impacts the payment later. If Euribor climbs, borrowers can limit increases by extending the fixed portion, making the plan attractive in a rising-rate environment.
Experts note that the dynamics can shift with central bank actions. In early 2024, banks were expected to adjust rates upward, with some exceptions, as the European Central Bank signaled further rate movements to curb inflation. For this reason, owners should not assume an easily accessible mortgage, keeping mixed loans a preferred option for many Spaniards for the time being.
While the market evolves, the hybrid approach remains popular due to its built-in flexibility. It offers a balance between initial stability and later exposure to market rates, a combination that appeals to borrowers who want to hedge against future rate swings without giving up potential savings if rates fall sooner than expected.
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What might happen in the future?
Recent ECB decisions hint at a softer trajectory for loan costs toward the end of the year. The bank set rates at a level that keeps borrowing costs in check, signaling a cautious pause rather than a rapid ascent. This outlook suggests new room for households and investors to navigate the mortgage landscape without sudden spikes in monthly payments. Banks and regulators continue to monitor inflation and economic growth as they determine the pace of future adjustments. In this environment, mixed mortgages retain their appeal for many buyers, even as the path ahead remains shaped by policy and market forces.