Euribor is the interest rate most often used to work out mortgage payments in Spain and to calculate both variable and fixed rates. It is anchored to the interest rate set by the European Central Bank and the rate that banks in the Eurozone use to lend to each other. When the base rate goes up, the Euribor does too, which sends mortgage interest rates across the Eurozone rising. Starting in August 2023, the Euribor has been dropping for the first time since 20 months prior. The current level of 1-month Euribor stands at 3.85%, which is substantially lower than the 4.15% of last July 2023.
The expectation is that the European Central Bank will stop increasing its rates in the medium term, so the market is anticipating that with a lower Euribor rate. This will mean mortgage payments will fall, which will be supportive of the property market in general. However, the rate still remains high compared to August 2022, when it was 1.25%. The real effect will not be instant and will depend on the specific pending institution, but sentiment is important in real estate markets, and this seems to be turning.
