Falling Mortgage Rates: What Buyers Should Know in 2025
The European Central Bank’s rate cuts throughout 2024 and 2025 have lowered the cost of borrowing. The 12‑month Euribor—benchmark for most Spanish variable mortgages—has dropped to around 2.08 %, its lowest level since 2022 lucasfox.com. Fixed mortgage rates that hovered near 4 % in early 2024 are now offered at roughly 2.5–3 % by July 2025, and some mixed‑rate loans start as low as 1.55–1.85 % lucasfox.com. Variable rates typically begin around 2.6–2.8 %, making monthly payments more affordable lucasfox.com.
ECB data corroborate this trend: by September 2025 the average rate for new housing loans in Spain was 2.66 %, down from 3.26 % a year earlier globalpropertyguide.com. Loans with floating or up‑to‑one‑year fixed rates averaged 2.77 %, whereas loans fixed for 5–10 years cost about 3.49 % globalpropertyguide.com. Mortgages fixed for over ten years were as low as 2.49 % globalpropertyguide.com. As rates eased, new mortgage lending surged 26 % year on year in Q2 2025 reuters.com, prompting the Bank of Spain to increase oversight of lending standards.
For buyers, these conditions spell opportunity. Lower rates reduce monthly payments and expand borrowing capacity. Spain now offers some of the cheapest home loans in the euro zone—averaging about 2.66 % versus the euro‑zone average of 3.32 % reuters.com. However, banks still apply strict lending criteria for non‑residents, and typical loan‑to‑value ratios range from 60–70 %. With supply still tight, prospective buyers should secure mortgage pre‑approval, consider locking in rates, and work with knowledgeable brokers to navigate paperwork and local regulations.
