Record 15-year Euribor drop: How does it affect your mortgage? And the price of apartments?

BarcelonaVariable-rate mortgage holders continue to rejoice. The 12-month Euribor, the benchmark mortgage rate, reached its lowest level since the fall of 2022 this April, standing at 2.143%. Significantly, it reached this level after registering the largest year-over-year drop in the last 15 years. And this, for variable-rate mortgages updated now, represents the largest savings over this entire period.

This is because in Spain, unlike other countries, most variable-rate mortgages are linked to the 12-month Euribor: this means that mortgage holders' payments are revised annually and, therefore, take longer to experience changes in this indicator. A year ago, in April 2024, the 12-month Euribor began a new period of decline after two years of rising, which reached 3.718%. Since then, it has continued to decline, driven by an intense rate cut by the European Central Bank (ECB), which has seen up to six consecutive rate cuts since June 2024. But what effect does all this have on mortgages?

If a mortgagor signed a standard mortgage of €150,000 a year ago for the next 30 years at a variable interest rate of 4.7% (3.703% Euribor + 1% bank spread), they would have to pay a monthly payment of €778. Now, a year later, with the Euribor at 2.143% (adding the same 1% spread), the rate would be reduced to 3.143%, meaning the payment from the second year onwards would be €644 per month. This is equivalent to paying €134.2 less per month, which would save up to €1,610.3 in one year, until the next annual adjustment. But the savings could be even greater.

Good news for fixed-rate mortgages

For Ricard Garriga, CEO of the mortgage broker Trioteca, this downward trend in the Euribor is good news for variable-rate mortgage holders, but he also points out that since fixed-rate mortgages are available on the market below the Euribor, families with fixed-rate mortgages could also save some money.

"Furthermore, if this family, who will be paying €644, switches to a fixed-rate mortgage, which currently has a Euribor of 2.15%, they would pay €565 per month, an even better situation," Garriga emphasizes. 1.5% in the first 10 years, and that would mean that they would have a monthly payment of 519 euros," he adds.

So, if a family took all these steps, they would go from 778.23 to 519 euros per month, a monthly saving from a new account implies an exchange rate of more than 250 euros each month. –which generally ranges from 250 to 400 euros– and also pay the total or partial cancellation clauses that some conventional banks make people sign to get a mortgage.

Housing prices are entering the mid-2025 period with the boost of a near-record year: in 2024, the value of houses and apartments soared by an average of 8.4% in Spain, the strongest rebound since 2007, when prices grew by 9.8%. This was the first time they had surpassed their all-time high of 2007. In Catalonia, the pace is different: last year neither saw the strongest rebound since the bubble nor did it yet break the peak of the brick-and-mortar era.

For Garriga, the Euribor's performance is revealing and predicts that it will be below 2% by the end of the year, because Trioteca already has fixed-rate mortgages below the Euribor. "Will we have cheaper mortgages by the end of the year? Radically, yes," says this expert. Now, the drop in mortgage interest rates generally leads to an increase in demand, which can be reflected in apartment prices, as Garriga also warns: "Families looking for an apartment will have to keep in mind that prices keep rising. The price of the house cannot be changed, but the mortgage can, if signed at a given time. One last question. Does this make this a good time to buy?"

According to the manager of the Chamber of Property, Òscar Gorgues, "with regard to housing prices, when rates drop, they experience an upward trend, especially now that there is a solvent and consistent demand, therefore, it is likely to boost housing prices."