Several months have passed as Spanish banks gradually raised interest rates on new deposits. Smaller institutions moved a bit faster, while larger ones tended to negotiate more individually when customers asked, rather than presenting broad offers. As a result, banks now pay an average of about 2.33% on new term deposits in July, a rise from June’s 2.21% but still noticeably higher than last year’s July figure when the European Central Bank began tightening policy. The rate in January stood at 0.67%, and the latest level remains a few tenths above the Eurozone average, reflecting persistent differences in liquidity and market conditions. Banks continue to charge fees on savings products, though the premium on deposits remains lower than the Eurozone average of 2.83%.
Traditionally, the gap between what is paid on deposits and the prevailing rates in the broader currency union has never been very large in Spain. Since 2003, the spread has typically hovered around a few decimals, sometimes only fractions of a point. Historically, Spanish banks earned higher wages than their European peers during certain periods, notably through the mid-2000s and again around the housing bubble era or amid the waves of the financial crisis. In recent months, however, the difference has grown tighter in some moments to the point of approaching levels seen in Turkey, with spreads around 1.65 percentage points in the Eurozone versus 0.67% in Spain in January. This shift is tied to abundant local liquidity that keeps deposit rates from rising quickly, even as loan costs begin to climb—placing the net effect in the hands of borrowers and savers alike.
Policy developments have influenced this dynamic. The European Central Bank has been gradually pulling liquidity from the market, and loan demand has cooled, reducing the need for banks to secure funds. Nadia Calviño, the Vice President for Economic Affairs, has publicly urged the industry to accelerate the pace of deposit remuneration, noting that higher fees should accompany deposit growth. In conversations with financial employers, she has signaled a renewed emphasis on raising deposit rates in the near term. At the same time, the ECB has reiterated that increases in loan rates should be complemented by higher deposit yields to make the inflation-fighting measures more effective.
Companies and checking accounts
Since 2016, households have often faced higher fees on deposits than businesses, a pattern that continues to influence the balance of savings. Time deposits paid around 3.11% in July, which is about 0.78 percentage points higher than households typically receive. Over the years, the average amount held in various deposit forms has shifted. The average savings balance among households sits around 1.27% for traditional deposits, while corporate accounts average about 2.6%. Additionally, roughly 90.5% of individuals hold deposits in traditional accounts, with balances near 0.12% in 2014 when negative rates were introduced to spur growth. Distribution across account types has evolved, reflecting the broader push to secure financing as banks fare with cheaper funding.
The rise in time deposits pushed households to July’s figures. About 93,504 million euros were allocated to these savings products, a 27,044 million increase versus the same month in 2022 and up 7.4% by June. Nevertheless, the money kept in checking accounts rose strongly at first, reaching 894,953 million as families shielded resources to weather higher rates and inflation. That shift contributed to a slight decline in overall bank-held funds in July, with total deposits amounting to 988,457 million, down 11,400 million from a year earlier and 0.5% lower by June.
Most expensive loan
On the lending side, new mortgage rates in July showed a modest uptick, averaging 3.75%—roughly 0.25 percentage points higher than the previous month and well above year-ago levels. This aligns with a broad European trend of higher borrowing costs as policy makers tighten. In Spain, mortgage rates have risen to levels close to the euro area average, while the overall cost of credit has continued to move with market conditions. The portfolio-wide mortgage rate stands near 3.33%, near the high end observed since late 2009.
Households ended July with a record credit debt for banks, totaling around 688,007 million euros, a value lower than a year earlier by about 1.8%. This softer demand comes as the cost of credit rises and purchasing power falls due to inflation. Early repayments have accelerated, helping to push mortgage lending down by roughly 3.1%, to 501,585 million. Other loan categories have seen mixed movements, with consumer credit and business lending slipping further to around 927.9 billion euros.