Euribor stood at 4.001% in June 2023, a level that keeps the highest average since November 2008 under review. Even with the European Central Bank signaling a rate increase to 4% just two weeks earlier, the reference index for variable mortgage loans showed stability, continuing a gentle month‑over‑month rise of one to two tenths.
Mortgage experts have commented that we have not seen such a rapid escalation as last summer, particularly between August and September 2022 when a single percentage point separated one month’s data from the next. This is seen as good news by many in the market. Simone Colombelli, a comparator and mortgage advisor and director of Mortgages iSavings, described Euribor stabilization as a phase that has arrived. Yet he remains cautious, predicting small increases through the summer as the ECB prepared for another rate rise to 4.25% on July 27.
From that point, the peak in Euribor levels and interest rates could be reached, though the timing will also hinge on policy decisions from the European institution led by Christine Lagarde around September. It is likely that the peak for Euribor and mortgage costs may occur by year end. A mortgage director and comparison tools are keeping watch to gauge how closely the market will align with current trends.
How is the mortgage market currently?
Mortgage costs, inflation, and reduced purchasing power are shaping a softer mortgage market in Spain. Analysts note that there is a visible slowdown in mortgage activity and in manufacturing, with house prices remaining unusually high and slow to drop. While some changes are expected to occur in the first half of the year, market insiders remain measured in their outlook.
Spokespersons for iAhorro indicated that some lenders have nudged offers upward by at most 0.25 percentage points, following ECB direction, and that drastic shifts in available products are not anticipated. Fixed-rate mortgages continue to appeal to many Spanish borrowers, though mixed mortgages are increasingly common as buyers seek flexibility.
Currently, mixed mortgage products are offering fixed tranches around 2.5% for the initial five, ten, or fifteen years, while many fixed-rate products already exceed 3% or 3.5% TIN. The prevailing advice is to consider a mixed mortgage now and wait for Euribor to ease, a moment not far off before the floating tranche settles.
Relative to variable mortgages, these products are regaining interest as expectations grow that Euribor will crest and then begin to fall. This could make variable mortgages attractive for investors, especially if offers dip toward 0.1% to 0.2% in the near term.
Rate movements and installments
Installment increases continue for those with variable mortgage contracts when reviewing payments this month, but the pace of growth has slowed compared with the early part of the year. For a sample variable mortgage of €150,000 over 30 years, Euribor plus the fixed spread would shift monthly payments from about €542.65 to €804.32, an increase of roughly €261.67 per month and about €3,140 more annually, at least until mid‑2024. Euribor’s current level at 4% marks a significant rise from 0.852% in June 2022.
Last month saw a notable uptick as well, with a monthly increase around €279.72 for a mortgage with the same features. In April the rise reached roughly €288.98, and March recorded the largest monthly jump at about €295.61. Industry insiders describe this year as a transitional period full of developments in the mortgage and financial markets, with expectations that Euribor will peak this year and begin a decline from 2024 onward, following a pattern that mirrors past movements though in reverse.