Mortgage In Spain Online Calculator

The last average rate of interest of a mortgages in Spain registered by the Bank of Spain reaches 1.72% (data from April 2020).

The interest rate that the banks that operate in Spain apply to their mortgage loans is currently very competitive and, in addition, with a downward trend.
But what is the reason for this reduction? Despite the regulatory changes introduced by the new mortgage law, the prices of new operations have fallen due to the fall in the Euribor. Thus, we can still get a very cheap and very low interest mortgage: variable rates of less than Euribor plus 1% or fixed interest of less than 2% at 30 years.

As we said, the current interest on mortgages is very low. And it is necessary to remember that we come from two price wars; one in the fixed rate sector and the other in the variable rate sector. Below we show a summary chronology of the most outstanding milestones of recent years.

Years 2015 and 2016: price war on fixed mortgages. Spanish financial institutions begin to offer products with interest from 2% to 20 years or even from 1.50% for shorter terms.

Year 2017: stagnation of interest. Banks slow that general decline and keep fixed rates to a minimum, while choosing not to touch variables.

First three quarters of 2018: price war on variable mortgages. Encouraged by the rise in the Euribor, banks reduce the spreads of their variable rate loans and, in some cases, put them below 0.90%.

Last quarter of 2018 and first months of 2019: interest rate rise. The controversy over the IAJD and the imminent approval of the new mortgage law leads banks to raise the interest on their mortgages, both fixed and variable rates.

Since mid-March 2019: reductions in fixed rates. After the announcement of the European Central Bank (ECB) to postpone the rise in interest, various entities begin to lower their fixed mortgages.

October 2019: more than a third of variable mortgages become more expensive. Various entities, mostly small and online, took advantage of the beginning of the last quarter of the year to raise the spreads of these products and / or to increase their commissions or initial interests. This reveals that banks want to increase the low margins they obtain with these loans and, also, that their clients opt for fixed rates.

March 2020: the coronavirus crisis begins. The Euribor has been trading higher since then, although for now it remains negative. It remains to be seen how this affects the rates applied in the following months.

The low interest rate of current mortgage loans cannot be understood without talking about the Euribor, which is the index to which the vast majority of Spanish variable mortgages are referenced. At the moment, it is trading negative after adding several consecutive collapses since March 2019.

The low rate of the Euribor also encouraged banks to lower the rate applied to their fixed mortgages, which are safer products for both entities (they have a lower risk of delinquencies) and consumers (the fee is always constant). This allowed the interest of these products to become the lowest ever seen in Spain.

The Euribor is currently trading at -0.081% (data from May 2020)

The interest on current mortgages leaves little profit margin for entities, which have sought other ways to increase the income they receive by granting them. Here are some of the main steps they have taken.