Cheaper mortgage in Spain (Euribor in November 2024)

Impact on Mortgages in Spain 

The Spanish real estate market is in a moment of significant change due to the recent decline in the Euribor. This index, used as a reference for most variable-rate mortgages in Spain, has experienced a historic drop that positively affects both mortgagees and the real estate sector in general. In this article, we take a closer look at what this decline means, how it influences household finances, and what opportunities it creates for those looking to buy or sell property.

What is the Euribor and why is it so important?

The Euribor, an acronym for "Euro Interbank Offered Rate", is the index that reflects the interest rate at which European banks lend money to each other in the short term. This indicator is crucial because it serves as the basis for calculating the interest on most variable mortgages in Spain. Its evolution determines how much the holders of these mortgages pay, directly affecting their monthly finances.

The connection with the European Central Bank

The behavior of the Euribor is closely related to the decisions of the European Central Bank (ECB) on interest rates. When the ECB reduces rates, as has happened recently, the Euribor tends to fall, which translates into lower mortgage payments for millions of families.

A historic decline: The Euribor in November 2024

In November, the Euribor stood at around 2.5%, marking its largest year-on-year decline in the last 15 years. This fall has been driven by the ECB's monetary policies, which seek to stimulate the eurozone economy by reducing the cost of money. This context represents a significant relief for mortgage holders in Spain, who have seen their monthly payments reduced considerably.

Practical example: Monthly and annual savings

To illustrate the impact of this decline, consider a €150,000 25-year mortgage with a 1% spread:

  • Semi-annual review: The monthly fee drops from 974 euros to 876.5 euros, a saving of 97 euros per month.
  • Annual review: The fee drops from 1,003.81 euros to 876.58 euros, which represents a monthly saving of 127.2 euros and an annual saving of 1,526 euros.

This saving not only improves the financial capacity of families, but also opens the door to new strategies such as early repayment.

Impact on the real estate market

The decline in the Euribor not only benefits mortgage holders, but also has a direct influence on the Spanish real estate market. With lower fees, home buying becomes more accessible, incentivizing new buyers to enter the market. This generates an increase in transactions and revitalizes the sector, especially in regions such as Costa Blanca and Costa del Sol, where the demand for properties remains high.

Opportunity to renegotiate or subrogate mortgages

The current environment also offers an excellent opportunity for mortgagees to renegotiate their terms with the bank or consider a subrogation to entities that offer better terms. These actions can maximise the benefits of the Euribor decline, further reducing long-term interest.

Future outlook: What to expect from the Euribor?

Analysts point to two main scenarios for the coming months:

  1. Conservative scenario: The ECB could cut rates by 0.25 points, placing them at 3% by the end of the year. This would keep the Euribor on a moderate downward trajectory, with a possible stabilisation of around 2.3%-2.35%.
  2. Aggressive scenario: A more drastic cut of 0.5 points would further accelerate the fall of the Euribor, taking it below 2.3%. This scenario, although less likely, could occur if the eurozone economy faces greater challenges, such as economic stagnation in key countries such as Germany or France.

In any case, the Euribor seems to be on track to continue falling, benefiting both mortgagees and the real estate sector.

Strategies to maximize savings

The current context allows families to adopt various strategies to optimize their finances:

  1. Early repayment: Use the savings generated by the reduction in payments to reduce the outstanding principal of the mortgage. This can shorten the total term of the loan and decrease the interest to be paid.
  2. Investment in other areas: Take advantage of the reduction in expenses to invest in home improvements or diversify into other financial instruments.
  3. Review of contracts: Analyze the current conditions of the mortgage and renegotiate more favorable terms with the bank.

These measures not only improve the financial situation, but also offer greater peace of mind and long-term economic stability.

What does this mean for those looking to buy or sell?

For buyers, lower payments make buying a home more attractive and affordable. In addition, the low interest rate environment also encourages investment in properties, especially in strategic markets such as second homes or tourist rentals.

For sellers, increased demand can translate into easier deals. At Azul Villa, we are committed to facilitating this process, offering personalized advice and services that maximize the value of each operation.

Conclusion: A key moment for the real estate market

The decrease in the Euribor represents a unique opportunity for both mortgagees and those who wish to buy or sell a property in Spain. This context, marked by lower payments and a more dynamic market, allows families to plan their finances more efficiently and investors to find new opportunities in a favorable environment.

At Azul Villa, we are prepared to guide you every step of the way. Our team of experts offers customized solutions to ensure you make the most of today's market conditions. If you are considering buying, selling or need mortgage advice, do not hesitate to contact us. We're here to help you achieve your real estate goals!

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