On the 12th of September 2024, the European Central Bank (ECB) made a significant decision that could bring welcome relief to Spanish homeowners and property buyers.
By cutting core interest rates by 0.25%, the ECB has lowered its rate to 3.65%.
This drop marks a substantial decline from where rates stood a year ago, offering new hope for those on variable-rate mortgages and potential new mortgage borrowers.
What does this mean for Spanish mortgages?
Spanish mortgage lending is closely tied to the 12-month EURIBOR rate. With the latest reductions, this rate now sits at 2.95%—a significant drop from the 4.05% rate recorded a year ago. For anyone currently on a variable-rate mortgage in Spain, this is excellent news.
As EURIBOR rates drive the cost of borrowing, this change will soon be reflected in reduced monthly mortgage payments. Homeowners can expect to see these lower rates gradually impacting their finances over the coming months, easing the burden of their mortgages.
However, it’s important to note that while those with existing variable-rate mortgages will begin to see a reduction, the situation for new mortgage offerings is slightly different.
1. Delayed impact for new mortgage borrowers
If you’re in the market for a new mortgage in Spain, don’t expect these changes to come into play immediately.
From discussions with lenders, it appears that while the interest rate cut has been announced, Spanish banks may not factor it into their mortgage offerings until later in the year or possibly even next year.
Despite this delay, the overall outlook is promising. Whether you’re a current homeowner looking to benefit from falling rates or someone looking to secure a new mortgage, the environment is becoming much more favourable.
2. A healthier mortgage market
The drop in rates represents a major shift in the landscape of Spanish mortgages. With the ECB demonstrating greater confidence in controlling inflation, the reduction in borrowing costs is likely to have a ripple effect throughout the housing market.
Lower monthly mortgage payments will give homeowners more disposable income, while potential buyers may find securing financing more accessible as lending terms become more attractive.
3. Potential for further cuts
There’s also the potential for further reductions in the months to come. While nothing is set in stone, the ECB’s actions indicate a broader trend towards more stable and manageable interest rates.
As inflation pressures continue to ease, future cuts could help push mortgage rates even lower, presenting more opportunities for buyers and those looking to refinance.
Why now is the time to consider your options
If you’re a current homeowner with a variable-rate mortgage, now might be a great time to review your mortgage terms and see how the recent rate cut will impact your monthly payments.
For those considering buying property in Spain, the potential for further reductions in rates makes it a prime time to explore the market and secure a good deal.
Check out our YouTube video, where we discuss the latest news on European interest rates in further detail.
Contact Fluent Finance
Fluent Finance Abroad is dedicated to helping you make informed decisions and guiding you through every step of the process.
If you’re considering buying property in Spain, contact our team today. Either call 0034 952 85 36 47 or email info@fluentfinanceabroad.com.
We can also discuss your requirements via Zoom or Teams, or you can use our online enquiry form for personalised advice and assistance in securing the best possible mortgage terms.
