Spain’s mortgage rates have dropped to an average of 2.74% in July 2025, according to the Bank of Spain, making home loans more affordable despite rising property prices. Explore the latest trends in Spanish mortgage rates, fixed vs. variable loans, and what this means for buyers.
Spain’s Mortgage Rates Continue to Fall in 2025: Key Trends and Insights for Homebuyers
Spain’s mortgage market is becoming increasingly attractive for buyers as average mortgage rates hit new lows in 2025. According to recent data from the Bank of Spain, the average rate on new mortgages fell to 2.74% in July 2025, down from 2.80% the previous month and almost a full percentage point lower than last year. This trend offers significant savings for property buyers, even as housing prices continue to climb.
Average Mortgage Rates Drop in Line with Euribor
The drop in Spanish mortgage rates closely follows the evolution of the Euribor, the reference rate for most home loans in Spain. In July, the Euribor stood at 2.08%, slightly less than June, and almost 1.5 percentage points lower than the same month a year ago. For the first seven months of 2025, the average Euribor sits at 2.24%, while the overall average mortgage rate is 2.86%.
This alignment means Spanish borrowers are benefiting from a lower cost of credit, making home loans cheaper and monthly payments more manageable.
Fixed vs. Variable Mortgages: What are Buyers Choosing?
Latest data from the National Institute of Statistics (INE) highlights buyer preferences in Spain’s home loan market:
- 72% of new mortgages in June 2025 were at a fixed rate – the highest proportion since August 2022.
- Only 28% opted for loans at a variable rate.
Fixed-rate mortgages continue to outperform variable rates in popularity due to the current low-interest environment and long-term stability they offer. With average mortgage terms stretching to 25 years, many Spanish homebuyers are locking in favorable rates for the long haul.
Home Loan Volumes and Amounts Surge
Spain’s mortgage market isn’t just experiencing lower rates—loan volumes and amounts are also surging:
- The number of home mortgages increased by 31.7% in June 2025 compared to a year earlier, totaling 41,834 new mortgages – the highest since 2022.
- The average amount borrowed per mortgage rose by 15.5% year-on-year to €168,363.
- Total capital lent soared by 52.1% to €7.04 billion.
Despite modest declines in mortgage rates, higher property prices are driving up the amount buyers need to borrow.
Key Takeaways for Spain’s Property Market
- Falling mortgage rates make home loans more affordable, offsetting some of the impact of rising housing prices.
- Borrowers are favoring fixed-rate mortgages for the long-term security they offer, especially with low interest rates.
- The average mortgage term stands at 25 years, supporting greater borrowing power.
- The number and value of new home loans are surging, reflecting both strong demand and higher property values.
Should You Buy in Spain Now?
With Spain’s mortgage rates at their lowest levels in years, now could be an ideal time to consider purchasing property—especially for those looking for stable, predictable payments with a fixed-rate loan. However, buyers should also consider rising home prices and ensure monthly payments remain affordable over the long term.
