Renewal of a typical variable-rate mortgage in Spain often happens at the start of July. A monthly payment of 250 euros, or 3,000 euros a year, can be expected, as Euribor, the benchmark for most variable mortgages, closed June around 4.007 percent. This means roughly an extra 250 euros per month for many borrowers.
Thus, Euribor crossed the 4 percent threshold for the first time since 2008. The index has continued to hit levels not seen since the financial crisis, reaching 4.165 percent on a recent Wednesday.
Interest rates set by the European Central Bank remain at 4 percent across the euro area, and many new mortgages start at this rate. For borrowers with existing loans, those with fixed-rate loans may feel relief while variable-rate borrowers face higher costs.
This situation naturally prompts questions about when mortgage costs might decline. Spanish Prime Minister Pedro Se1nchez and Deputy Prime Minister for Economic Affairs Nadia Calvio have signaled that measures to ease mortgage payments could be expanded, aiming to cap rents at 37,800 euros under new policy approaches.
Calvio noted that this election pledge, likely to be among the first changes in a potential new legislature, is driven by the improving economic backdrop and faster-than-expected increases in interest rates.
Bankinter’s outlook
Under the leadership of María Dolores Dancausa, Bankinter has refreshed its forecasts for the mortgage market. The bank projects Euribor to stay above 3 percent through 2025, with a notable reduction in mortgage prices between 2023 and 2024 and Euribor remaining above 4 percent this year. These projections reflect ongoing tightening of monetary policy and the impact on loan pricing.
The Savings Banks Foundation, Funcas, has calculated an annual Euribor average of 4.25 percent for this year and about 4 percent for 2024. BBVA Research sees a potential rise to around 4.5 percent. The consensus among analysts is that the European Central Bank will continue a gradual pace of rate hikes through the year, potentially taking the policy rate to about 4.5 percent by year end, which would raise the overall cost of housing loans.
In this climate, many borrowers are choosing to accelerate debt repayment or renegotiate the terms of their mortgages to soften the monthly burden. Data from the Bank of Spain, compiled by the Spanish Mortgage Association AHE, show more than 1.3 billion euros of renegotiations between January and April, a threefold rise from the previous year. In the first five months of the year, reductions in debt have totalled over 8.326 billion euros.