Analysts continue to view the 12-month Euribor as the primary benchmark for mortgage rates. This year, mortgage payments are expected to settle in a range roughly between 1.5% and 1.9%, though the actual average for December last year stood at -0.502%. Estimates vary, with Funcas projecting around 1.41% and Bankinter up to 1.90%. Looking toward the end of 2023, some forecasts already reach or exceed the 2% mark.
Last month, the indicator briefly touched 1%, finishing at an average near 0.992% after the European Central Bank raised rates by 0.50 percentage points, a move that echoes levels seen about a decade ago. Even with these shifts, the position remains close to historical references from ten years ago.
Compared with a year ago, the rise is substantial. In July 2021, Euribor stood at -0.491%, marking a jump of a bit over 300%, or about 1.5 percentage points. Through August, daily rates fluctuated between 0.94% and 0.96%, signaling a tempering of the upward trend in the near term.
What this means in practice is a direct impact on floating-rate mortgage borrowers, a group that numbers more than four million people. For households carrying mortgages of €150,000 with Euribor plus 0.99% and with a July review, monthly payments can climb by roughly €100, moving from about €448.72 to around €549.49. Annually, that translates to an increase near €1,209.24 per household, reshaping personal budgets and consumption plans.
The banking sector, which has seen a real uptick in mortgage activity, notes that families can generally withstand rate increases of around 1% to 2%. CaixaBank Research maintains a cautious optimism, projecting a 12-month Euribor at about 1.48% this year and roughly 1.78% by the end of the next year. These projections reflect ongoing dynamics in mortgage markets as major lenders report results and adjust lending strategies.
In the private sector, CaixaBank expects a modest loan portfolio expansion of about 0.5% in 2022. The broader credit environment faces uncertainties from global factors, including geopolitical tensions that influence consumer confidence and spending. Yet the housing and consumer portfolios are anticipated to keep positive momentum amid these conditions, potentially supported by robust real estate activity alongside consumer lending.
CaixaBank has also shown strength in mortgage issuance, with a notable year-to-date increase. For the first half of the year, new lending activity outpaced layoffs for the first time in more than a decade, hinting at a resilient real estate market into the second half. While a slowdown is forecast from September, it is not solely driven by rate movements; rising prices and a softer economy also play roles. Foreign demand remains a meaningful driver, representing about 14% of total activity, with certain regions like the Balearic Islands and the Levante showing rates as high as 30%, according to CaixaBank Research.
Banco Sabadell also reports record mortgage volumes and anticipates that Euribor for the coming year will not rise beyond 2% to 2.5% by year-end 2023, contingent on inflation trends. Bankinter analysts expect the annual Euribor to hover around 1.90% this year, about 2.20% in 2023, and roughly 2.00% in 2024.
Overall, the mortgage market has shifted. Fixed-rate mortgages, now commonly offered for 25 to 30 years, typically range from 1.7% to 2.9% and can reach 2.2% to 4.3% without incentives such as payroll deposits or ties to other products. Variable-rate loans with a 30-year term start near 0.6% to 1.87% in the first year, with spreads generally from 0.6 to 0.89, and subsidized products showing first-year rates from 0.6% to 2.97% alongside spreads from 0.95 to 2.05.
The upward trend in fixed-rate mortgages persisted for a period, but since the Euribor began rising in January and briefly dipped into negative territory last April, the rate has climbed past the 1% threshold, something not seen in two decades. These products now account for roughly 16% of the total mortgage stock, signaling a notable shift in how households finance home purchases and refinances.