Shorouk Express
As anyone who keeps track of the Spanish property market knows, getting on the housing ladder has been a struggle for many Spaniards in recent years.
Nowadays many can barely afford to even find a rented place, a trend The Local has covered in detail and you can read about here, and those that might’ve been financially stable enough to consider buying a property were hit with post-pandemic interest rate rises.
Upward inflationary pressure sent mortgage rates surging, meaning that for lots of people in Spain the prospect of buying a house became a distant dream.
This arguably peaked in October 2023 when the Euribor reached a high of 4.16 percent, pushing yet more people into the rental market. The Euribor is the index to which most variable mortgages in Spain are tied.
However, according to experts, 2025 might actually be the year that changes — or that interest rates finally come down, at least, because cuts in the Euribor rate (something we’ve finally seen in recent months) usually precede cheaper mortgage rates on offer from banks a little later down the line.
The Euribor also serves as a benchmark for fixed and mixed-rate mortgages, since any fall precedes an update of what banks will offer, usually involving cheaper rates.
As one editorial in Cindo Días puts it: “Anyone thinking of buying a home could find 2025 to be the ideal time.”
Spain’s main property websites, including Idealista, pisos.com and Fotocasa, all agree on this and believe that the number of mortgages taken out in Spain will continue rising throughout 2025.
Looking at the upward trend that began at the backend of 2024, this seems likely. According to data from Spain’s National Statistics Institute (INE), in December 2024 alone over 30,000 were signed — which represents 30 percent year-on-year increase.
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This is due in part due growing consumer confidence and a strong Spanish economy – in headline macroeconomic terms at least – as well as a sense among Spaniards that property prices will just continue to rise year on year as they have for some time now, so why wait?
According to a survey conducted by ING Consumer Research at the end of 2024, over 70 percent of Spaniards expected house prices to increase over the next 12 months.
READ ALSO: What will happen to property prices in Spain in 2025?
but also because of cuts to the Euribor, which has now brought the main mortgage index to around 2.4 percent, something property experts believe could spark a ‘price war’ between banks in the coming months.
Some even foresee offers below 2 percent APR (TAE in Spanish), something unthinkable a year ago.
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Ricardo Gulias, CEO of Tu Solución Hipotecaria, told Cinco Días that “Spanish banks have a lot of liquidity, which means that they are not so dependent on the European Central Bank (ECB) and can offer mortgages with their own money. In the next four or five months, we could see APR rates below 2 percent.”
READ ALSO: The hidden costs of taking out a mortgage in Spain
Since that 2023 high mark, the Euribor has fallen in line with the interest rate cuts applied by the European Central Bank (ECB). Markets estimate that it could even fall to as low as 1.75 percent by the end of the year, and experts expect that banks will soon begin to pass these cuts onto mortgage offers.
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However, it’s not happening quite yet. “Financial institutions are reacting to the latest interest rate cuts in a very controlled manner, with small cuts. What’s more, we found quite a few banks that have not yet reacted to the latest cut and have not improved their offer,” said Pablo Vega, a financial expert at Roams.
As the end of the financial year approaches, banks tend to take stock of their position and seek commercial objectives. With a better idea of the big picture moving into the next year, it becomes in their interest to offer more attractive rates.
However, during those first few months of the year (note that in Spain the financial year mirrors the calendar year, unlike in some countries) banks don’t often make aggressive interest rate offers until they see how other banks behave. According to what most experts seem to believe, the ‘price war’ on rates could begin in the coming months.
READ ALSO: The cities in Spain where you can buy a 3-bedroom flat for under €150,000
It’s also worth remembering that the mortgage rates banks offer online or in promotional material might not be the same rate you’re offered in branch. Usually, banks rate the personal creditworthiness of each customer and calculate a figure from that.
That is to say, you may get lower rate offers in branch, depending on your financial situation. If the experts are anything to go by, 2025 might be the time to get a mortgage in Spain.
READ ALSO: Which foreigners are most likely to have mortgages approved in Spain?
