Homeowners in Spain with variable-rate mortgages are likely to continue seeing drops in their monthly payments, experts have said – despite interest rate rises.
The 12-month Euribor – the main benchmark for most variable-rate mortgages in Spain – rose to an average of 2.172% in September, its highest level in six months.
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Although the figure awaits official confirmation from the Bank of Spain, this marks the second consecutive monthly increase.
Despite the uptick, variable-rate mortgage holders will continue to see lower repayments, at least for now.
That’s because the Euribor stood at higher levels – around 2.4% in March and nearly 2.9% a year ago in September 2024 – meaning both six-month and annual loan reviews will still reflect a decline in the index.
How much will mortgage payments drop?
According to Idealista, for an average mortgage of €150,000 over 25 years, with an interest rate of Euribor + 1%, monthly payments will drop by about €60, going from €786 to around €724. Over the course of a year, that’s a saving of roughly €740.
If the loan amount is €300,000 under the same conditions, the monthly savings would be about €124, adding up to almost €1,500 annually.
However, the exact reduction varies based on several factors:
- Loan amount and remaining balance
- Years already repaid
- Interest rate spread applied by the bank
No major Euribor swings expected soon
Experts don’t expect any large shifts in the Euribor in the coming months. The European Central Bank (ECB) held interest rates steady at 2% in early September and signalled no immediate plans for further cuts.
In this context, analysts forecast the Euribor will hover between 2.1% and 2.2% through the end of 2025, barring any major surprises.
According to Ebury, Banco Santander’s international payments and FX fintech, the bar for further ECB rate cuts is now extremely high.
‘The likelihood of another cut is extremely remote. In fact, we would go even further: we believe the rate-cutting cycle is over,’ the firm said.
Ebury argues that for the ECB to consider additional monetary easing, there would need to be clear signs that US tariffs are significantly hurting the eurozone economy – something that currently seems unlikely.
This new phase of Euribor stability casts doubt on earlier predictions that it might fall below 2% by the end of the year.
Still, many mortgage holders will continue to benefit from moderate payment reductions, at least until March 2026, assuming no major shifts in ECB policy.
Read more Spanish property news at the Spanish Eye.
