September saw an unexpected rise in the 12 month Euribor. The index used for Spanish Mortgages.
The Euribor index for Spanish Mortgages increased this month. This increase was small moving from 2.079% to 2.114%. However it was upward trend after many months of decreases. Spanish Banks have not responded to the change. In terms of product offerings for Mortgages in Spain. Fixed rates for 20 years can still be achieved with a range of rates from 2.75% to 3.5%.
With continuing stubborn inflation levels. Also economic uncertainty. For instance global pressures like US tariffs. The ECB have held borrowing rates steady. Therefore whilst ECB rates have not risen they are not falling as anticipated. Septembers figures are a reflection of this.
It is anticipated Spanish Mortgages rates will remain stable for the rest of the year.
Spanish mortgage market latest updates
In other news the housing market in Spain is growing. It predicted prices will rise by between 3 to 7% by end of 2025. This is being reflected in the average size of Mortgages in Spain. Which has increased steadily through the year.
With prices rising also a housing shortage Banks in Spain are less risk adverse. The impact of this means they are more likely to negotiate on terms and conditions.
Despite some challenges, the non resident buying market remains strong. Factors like weather, prices of food and drink. Also access to cheap flights continue to make Spain a great place to own a holiday home. Spain remains one of the most fluid European countries for non resident Spanish lending. Spanish lenders have historically remained very active in the non resident mortgage market.
Whilst the 2019 regulatory changes had an impact on Spanish mortgages. For instance affecting those earning in certain currencies. Also access to fixed rates for non euro earners. Some of these restrictions have been relaxed. This is particularly true in the arena of fixed rates. Applicants earning their incomes in major currencies. Like sterling or Dollars, will not experience issues in gaining a fixed rate.
Fixed rates versus variable rates for a Mortgage in Spain
Despite the increase in the Euribor index for Spanish Mortgages. With 20 year fixed rates starting at 2.75%. Then taking a fixed rate remains a good option. Providing long term stability for the borrower. We would still advise on selecting a fixed rate when taking a mortgage in Spain.
However for Spanish mortgage applicants who intend to overpay. Or redeem the loan in the early years, a variable may be a better choice. Due to higher early redemption penalties for fixed rates.
However a couple of lenders in Spain offer mixed rate products. In this instance an applicant can fix for a shorter period. Normally 3 to 5 years. Reverting to variable after this period. Whilst suitable for some clients with mid term redemption goals. In general the fixed rates are much higher in the early years. Than for instance long term fixes. On the plus side the margin above Euribor. Once the fixed term is over. Is normally lower than a variable taken at inception.
In conclusion, with Euribor rates holding just above 2%. Along with little likelihood of this not changing in the coming months. Fixed rates remain very competitive. Average margins above Euribor are between 1% to 1.5%. In most instances this means current variable rates are above the fixed rates that can be achieved.
The benefits of taking Independent advice
Spanish Banks continue to offer bespoke terms and conditions. Therefore each application is reviewed on its own risk merit. Applicants with low debt to income ratios. Also lower to loan to values. Along with income stability, will achieve lower rates.
It is always wise to gain expert advice from an independent mortgage adviser in Spain. When undertaking the Spanish Mortgage application process. To be sure the right selection of product and provider is made. Therefore tailored to your specific circumstances and needs. Appointing an expert to negotiate the best possible terms and conditions can save you money in the future.
Contact us today for further information and advice.
