After five months of steady increases, the Euribor — the main reference interest rate for variable mortgages in Spain — has edged down slightly in January for the first time. According to preliminary calculations, the average value of the 12-month Euribor index for January stands at 2.246%, marginally below December’s 2.267%.
Spain Press Editorial Team
by Marlon Gallego Bosbach
After months of sideways movement, the latest dip points to a potential stabilisation of interest rates. The Euribor reached its peak in October 2023 at 4.16%, following a series of interest-rate hikes by the European Central Bank aimed at curbing inflation. Since then, a slow but steady downward trend has taken hold.
From negative rates to a turning point
A look at the longer-term trajectory highlights the scale of change in recent years. In January 2021, the Euribor stood at −0.51%, before rising sharply from 2022 onwards. That surge placed significant pressure on households with variable-rate mortgages.
The current decline is therefore being interpreted as a first positive signal for borrowers, even though interest rates remain well above pre-crisis levels. Analysts see scope for moderate relief, particularly for households whose mortgage rates are reviewed annually.
Tangible impact on mortgage holders
As the Euribor serves as the benchmark for the majority of variable-rate mortgages, any fluctuation has a direct effect on monthly repayments. Depending on loan size, remaining term and revision date, borrowers may now see noticeable savings.
Example 1 – €300,000 mortgage
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Spread: +1%
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Monthly interest saving: approx. €45
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Annual saving: approx. €535
Example 2 – €150,000 mortgage
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Spread: +1 %
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Monthly interest saving: approx. €22
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Annual saving: approx. €268
Borrowers with semi-annual rate reviews also benefit. A €300,000 mortgage, for instance, could save around €26 per month, or €316 per half-year.
Experts caution, however, that the level of relief varies widely and that not all households will feel the effect immediately.
Regional differences amid a strained housing market
Alongside the easing in interest rates, Spain’s property market remains under pressure. House prices rose by 14.4% in 2025, far outpacing GDP growth and highlighting the widening gap between incomes and housing costs. Spain is also facing a housing shortfall of around 800,000 homes, with more than half of the deficit concentrated in Madrid, Barcelona and Valencia.
The impact of the Euribor decline varies by region:
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Madrid and Barcelona: Despite the drop, affordability pressures remain acute due to persistently high property prices.
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Andalusia and Galicia: Households tend to benefit more, as lower property prices mean interest-rate cuts translate into clearer relief.
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Coastal areas (Costa del Sol, Costa Blanca): Many foreign buyers with variable-rate mortgages are seeing savings on holiday homes.
Outlook for interest rates
Analysts expect the Euribor to remain broadly stable in the coming months. Sharp rises or falls are currently considered unlikely.
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Forecasts suggest an average Euribor rate of around 2.17% in 2026.
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Minor fluctuations are possible, but these are not expected to have a dramatic impact on monthly mortgage payments.
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Some experts see room for further modest declines if inflation continues to ease or if monetary policy remains unchanged.
Small relief, meaningful impact
January’s Euribor dip in 2026 offers a welcome break for mortgage holders who have endured months of rising borrowing costs. While rates remain elevated, the first decline in five months provides many families with some financial breathing space.
In a housing market defined by high prices and limited supply, it is clear that both interest rates and property dynamics shape household finances. For those with variable-rate mortgages, the current easing can deliver tangible short-term savings — a small but significant glimmer of relief at a time of high living costs and sharply rising property prices.
