Jos Deuling,  Friday, 24 November 2017

Interest rates Spain 

The rates of most Spanish mortgages are based on the . Euribor stands for Euro Interbank Offered Rate. It is the interest rate that European banks use to lend each other money. The mortgage in Spain is composed of the Euribor rate plus an additional percentage of X%, where X varies between 0.75% and 2%. Euribor + 1% is often encountered. The Euribor rate varies from 1 week to 12 months. With a monthly Euribor, you pay a lower base rate, but this involves of course a greater risk than the annual Euribor.

Below 2 graphs with the development of the Euribor rate in recent years.



Addtional percentage and costs

As you can see, the Euribor is very low at the moment. Many Spanish banks already keep in mind that interest rates will rise again in the coming years. They currently offer mortgages with rates around 2%. The difference with the Euribor interest rate of around 1% they use to line their own pockets. You should also be careful with banks that offer a low mortgage rate, but add high charges. Furthermore, it seems that Spanish savings banks charge a higher rate than commercial banks.

If you go shopping in the Spanish mortgage market, pay attention to the additional percentage banks add to the Euribor rate. This percentage is usually between 0.75% and 2%. Outliers to 3 or 4% are also found. Pay also attention to the costs that the bank charges. The cheapest mortgage in Spain is not always the mortgage with the lowest interest rate.

Mortgage quotes

Always get several quotes and take sufficient time to assess the offer. Spanish banks are required to publish a summary of interest rates. These rates are valid for 14 days so you do not have to accept the offer immediately. If you have multiple bids, you can negotiate the best deal.