Euribor rises for third consecutive day, signaling continued pressure on Spanish variable-rate mortgages
The Euribor, the key interest rate referenced in most variable-rate mortgages in Spain, increased by 0.008 percentage points on Friday, reaching an intraday high of 2.817%, according to data from the European Central Bank (ECB). This marks the third consecutive daily rise, reversing earlier declines and intensifying concerns among homeowners with adjustable-rate loans.
“The sustained upward trend in the Euribor reflects broader economic uncertainties, including geopolitical tensions and inflationary pressures,” said María Gómez, an economist at the Spanish Institute of Foreign Trade (IEE). “Homeowners should prepare for higher monthly payments as the rate stabilizes near 2.8%.”
What’s driving the Euribor’s recent rise?
The Euribor’s climb follows a period of volatility linked to global market dynamics. After two consecutive declines earlier in the week, the rate rebounded as investors priced in prolonged monetary policy tightness from the ECB. The central bank’s recent decision to maintain interest rates at 4.5% amid persistent inflation has contributed to the upward trajectory.
“The ECB’s reluctance to cut rates amid mixed inflation data has created a floor for the Euribor,” explained Carlos Fernández, a fixed-income analyst at Banco Santander. “Even with improved geopolitical conditions in the Middle East, the rate is unlikely to drop significantly in the near term.”
How will this affect Spanish homeowners?
For borrowers with variable-rate mortgages, the Euribor’s rise directly impacts monthly payments. A 150,000-euro mortgage over 25 years with a 1% differential would see monthly payments increase from 842.65 euros to 901.02 euros, according to a calculation by the Spanish Mortgage Association (AEM). This represents a 58.4-euro monthly increase, or 700.8 euros annually.
“The impact is particularly acute for homeowners facing rate reviews this month,” said Laura Martínez, a housing policy expert at the University of Barcelona. “With the Euribor hovering near 2.8%, many households will struggle to absorb the additional costs.”
What’s the outlook for the Euribor in 2025?
While the Euribor is unlikely to return to levels seen in 2024—when it averaged 2.3%—experts predict a gradual stabilization. The ECB’s upcoming inflation reports and potential rate decisions will be critical. A recent ECB survey indicated that 68% of economists expect the Euribor to remain above 2.7% through the end of 2025.
“Even if the ECB begins rate cuts in 2025, the Euribor will likely decline slowly,” said Javier Morales, a financial strategist at BBVA. “Homeowners should monitor their mortgage terms and consider fixed-rate options if possible.”
Why does the Euribor matter to the broader economy?
The Euribor’s movement influences consumer borrowing costs, business investments, and housing market stability. A prolonged rise could slow Spain’s housing recovery, which has been a key driver of economic growth. In 2023, the average mortgage rate in Spain was 2.6%, according to the Bank of Spain.
“A sustained increase in the Euribor could dampen demand for new homes and reduce construction activity,” warned Elena Ruiz, an economist at the Spanish Economic Research Institute (IEA). “This underscores the need for fiscal policies that support affordability.”
What steps should homeowners take?
Financial advisors recommend that borrowers review their mortgage terms and explore refinancing options. The Spanish government has introduced a temporary subsidy for low-income households, but eligibility is limited.
“Homeowners should act quickly to lock in favorable rates before further increases,” said Pedro López, a mortgage consultant at ING. “Consulting a financial advisor can help identify the best strategies for individual circumstances.”