Rise of the Euribor in 2025: How Does It Affect Your Mortgage?

The Euribor is giving many mortgage holders a break in 2025. A few weeks ago, we shared a forecast of trends in the real estate market for the second half of the year. As of now, if you have a variable-rate mortgage or are considering financing a home purchase this year, this article is for you. Let’s break down how the evolution of the Euribor may impact your finances and what strategies you can follow to make the most of it.

Euribor Trends in 2025

The Euribor (Euro Interbank Offered Rate) is the average interest rate at which European banks lend money to each other. This index is crucial because most variable-rate mortgages in Spain are tied to it. When the Euribor rises, so do mortgage payments; when it falls, payments decrease.

In May 2025, the 12-month Euribor closed at 2.081%, marking its lowest level since August 2022. This figure represents a significant drop from the 3.68% recorded in May 2024. Experts predict that if the European Central Bank (ECB) cuts interest rates at its next meeting, the Euribor could fall below 2%.

How Does the Euribor Affect Your Mortgage?

If you have a variable-rate mortgage, Euribor fluctuations are key. A drop in the Euribor means your monthly payment is likely to decrease at the next review. For instance, on a €150,000 mortgage over 25 years, the annual savings could exceed €1,500.

Keep in mind that variable-rate mortgages are typically reviewed annually or semiannually, so the impact on your payment depends on the timing of your next adjustment.

Strategies If You’re Seeking Financing in 2025

With the Euribor trending downward, 2025 could be a good time to seek financing — but that doesn’t mean rushing in without a plan. Mortgage offerings remain broad and diverse, and banks are adjusting their products to a lower-rate environment. Here are some key tips to help you make informed decisions aligned with your financial reality:

• Analyze your financial profile first: Before house-hunting, crunch your numbers. How much can you safely pay per month? Do you have job stability? Have you saved at least 20% of the property value for the down payment? This initial assessment will help you focus on mortgages that match your borrowing capacity.
• Compare different mortgage types: Even if no Euribor hikes are expected in 2025, don’t rule out fixed-rate mortgages. If you prioritize stability and don’t foresee changes in your situation, a fixed rate can protect you from future increases. Mixed mortgages, which start with a fixed rate and later shift to variable, can also be worth considering.
• Negotiate with banks: Don’t assume a bank’s terms are final. You can negotiate the interest rate, fees, and linked products. If you already have a written offer from another bank, use it as leverage to improve your deal.
• Consult a mortgage broker if overwhelmed: A financial intermediary can help you filter through hundreds of offers and find one that fits your profile. Just make sure they work transparently and explain all associated costs.
• Watch out for additional expenses: Besides interest, don’t overlook appraisal fees, notary costs, registration, or opening fees. Some banks cover them, others don’t. Also, be wary of linked products (insurance, payroll deposits, credit cards), as they can raise your total cost if unnecessary.
• Consider subrogation if you already have a mortgage: With Euribor on the decline, it might be a good time to review your current mortgage. If your bank won’t improve the terms, you could transfer it to another lender. Subrogation lets you do this without cancelling the loan, meaning fewer costs than taking out a new one.

The fact that there hasn’t been a Euribor hike in 2025 is good news for both current mortgage holders and those seeking financing. However, staying informed and making financial decisions based on a clear understanding of your personal situation and market conditions is essential.