The mortgage market is going through a period of transition. Following the ECB's rate rises in 2023–2024, conditions have stabilised and banks are actively competing for new customers. Is this the right moment to take the plunge? We analyse the current situation.
Current state of the mortgage market
At present, the Euribor stands at around 2.5%, well below the peak of nearly 4.2% reached in 2023, but also far from the 0% or negative rates of previous years. This stabilisation has created a landscape where:
- Fixed-rate mortgages are hovering around 2.8%–3.5% APR
- Variable-rate mortgages offer spreads of Euribor + 0.5% to 0.9%
- Mixed-rate mortgages combine an initial fixed period (3–10 years) followed by a variable rate
Fixed, variable or mixed rate?
Fixed-rate mortgage
Best for: people who prioritise stability and the peace of mind of knowing exactly what they will pay each month. Ideal if you have steady but modest income.
Advantage: your monthly payment will never change, regardless of what the Euribor does.
Disadvantage: currently, you will pay slightly more than with a variable rate, and if rates fall you will not benefit.
Variable-rate mortgage
Best for: people who can absorb fluctuations in their monthly payment and believe that rates will fall in the medium term.
Advantage: lower initial monthly payment and the possibility of paying less if the Euribor falls.
Disadvantage: uncertainty about future payments. A rise in the Euribor can increase your monthly payment significantly.
Mixed-rate mortgage (the top choice in 2025)
Best for: those who want initial security but do not want to miss out on potential rate reductions in the future.
Advantage: combines the best of both worlds. The first years (5–10) at an attractive fixed rate, then variable thereafter.
Key tips for negotiating your mortgage
- Compare at least 5 lenders: differences between banks can amount to thousands of euros over the life of the loan
- Negotiate linked products: banks offer better rates in exchange for taking out insurance, setting up a direct debit for your salary, etc. Calculate whether the discount outweighs the cost of the tied products
- Watch out for additional costs: valuation, notary fees, land registry and taxes can add between €8,000 and €15,000 to the total
- Request the FEIN: the European Standardised Information Sheet (ESIS) allows you to compare offers on a like-for-like basis
- Early repayment: make sure the early repayment conditions are reasonable (maximum fee of 0.15% during the first 5 years)
Why act now?
While no one can predict the future direction of interest rates, several factors suggest that current conditions are favourable:
- Banks are in active acquisition mode, which generates healthy competition that benefits the customer
- Property prices continue to rise, meaning that delaying a purchase could result in paying more
- The supply of new-build homes is limited, particularly in major cities
At Fincas Caseuro we work with the leading financial institutions and help you find the mortgage that best suits your profile. Request a free consultation.