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 autumn 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 of that.

"Furthermore, if this family, who will be paying €644, switches to a fixed rate, which is currently at a Euribor of 2.15%, they would end up paying €565 per month, an even better situation," Garriga emphasizes. But that's not all: "This scenario is for those who want stability, but people who want cheap ones have mixed mortgages, which start at 1.5% for the first 10 years, and that would mean a monthly payment of €519," he adds.

So, if a family took all these steps, they would go from €778.23 to €519 per month, a monthly savings of more than €250. However, it must be taken into account that these changes will entail costs: a new appraisal of the home would be necessary—which generally ranges from €250 to €400—and paying the full or partial cancellation clauses that some conventional banks require for mortgages. These range between 0.25% and 0.5% of the remaining capital due.

What effect could this have on the price of the home?

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 largest increase since 2007, when prices grew by 9.8%. This increase marked 11 consecutive years of upward growth and also broke its all-time high from 2007. In the case of Catalonia, the pace is different: last year neither saw the strongest rebound since the bubble nor did it yet break the ceiling of the brick-and-mortar era. One explanation for this imbalance is that prices in the Principality reached much higher levels. But, beyond what has happened, what is expected to happen next?

For Garriga, the trend in the Euribor is revealing, and he anticipates that by the end of the year it will be below 2% 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. However, 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 are constantly rising. The price of the house can't be changed, but the mortgage can, if it's signed for a period of time." One last question: does this make it 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 solvent and consistent demand; therefore, it is likely to boost housing prices."