What You Need To Know About Spanish Mortgages In 2024

If you’re thinking of moving to Spain or you live in the country and you’re ready to invest in a property of your own then you’ll need to know about Spanish mortgages. Interest rates in the country have been eye-wateringly high for the past two years but in 2024 it is expected that rates will drop.

This is good news both for Spanish homeowners and for would-be homeowners in the country too. Here’s what you need to know:

What Have Mortgages In Spain Looked Like?

For the last couple of years homeowners in Spain have faced sharp interest rate rises. This isn’t unique to Spain: rates have been high across Europe too. This has been very bad news for variable rate mortgage holders leaving many struggling to meet their payments.

In Spain this has impacted the property market not only by making mortgage payments more expensive but also by puttingoff many people who wanted to get on the property ladder but couldn’t afford the current rates. This drove more people to rentals and pushed rental prices up too.

By the end of 2023 the average mortgage interest rate was 3.32%. This was 1.5% higher than by the end of 2022. The result? A huge slow down in the Spanish mortgage market. Only 323,988 new mortgage contracts were signed in Spain in 2023.

Fall In The Euribar

In November and December 2023 we saw mortgage rates free and the Euribar fall.

If you’re not already familiar, Euribor is the interest rate most often used to work out mortgage payments in Spain and to calculate both variable and fixed rates. It uses figures set by the European Central Bank, and so the figure is linked to Euro-wide interest rate rises and falls.

In December 2023, the Euribor registered the largest drop since 2009, falling back below the 4 percent threshold to 3.68 percent. But it’s important to note that while that is certainly good news is should be tempered by the fact that those rates are still 2-3% higher than most people are used to.

What Can We Expect To Change In 2024?

Knowing what happened in 2023 will make it much easier to understand what might happen in 2024. Things seemed to be very cautiously improving  at the end of last year and we expect to see that trend continue. The Euribor had two consecutive slowdowns and has stopped rising, which moderated the mortgage market after the volatility of previous years.

We have already began to see banks lower the interest rates on their fixed rate mortgages, and if you’re looking to get a fixed rate mortgage now then you will find one below 4% right now: something that would have been very difficult last year.

As the Euribor falls we will also see variable rate mortgage options getting cheaper. Interest rates and the reference index for most mortgages are still high but the slowdown of rates could be enough to trigger a resurgence of the mortgage market in Spain in 2024.

Currently, more than half of the mortgages in Spain are variable mortgages, but the increases in the Euribor have turned it into a mortgage type with little demand. It is hoped that the rate drops seen across Spain in 2023 will generate a change in the mortgage industry that are here to stay.

If you Euribor rate continues to rise then it is likely that this will trigger an  increase in fixed rate mortgages in Spain. But it’s important to note that this will only happen if financial institutions lower their rates in line with inflation. If this does occur then we could even expect fixed rate mortgages to become the norm in Spain, which is not currently the case.

But this is all educated guesswork. Inflation will, as it has in so many aspects of life in recent years, have the last word. We can expect to see mortgage rates go down. But they will also remain higher than they were before this currency interest rate hike. In short, 2024 may be the year the mortgage market begins to turn around.

If you’re ready to find the Spanish property of your dreams then why not get in touch with our real estate experts? We’re ready and waiting to help turn your dreams into reality.