Lorraine Williamson
The European Central Bank has raised interest rates by 0.25 percentage points to 2.5%, its second increase of 2026, as policymakers try to control renewed inflation across the eurozone. For households in Spain, the decision matters particularly for variable-rate mortgages linked to Euribor, while savers could benefit from improved returns on deposits and interest-paying accounts.
The ECB also increased the rate on its main refinancing operations to 2.65% and its marginal lending facility to 2.9%. The new rates will take effect from 16 September.
The move follows a renewed increase in inflation, which reached 3.3% across the eurozone in August, well above the ECB’s 2% target. Rising energy prices linked to continuing conflict in the Middle East are a major factor behind the increase.
ECB president Christine Lagarde warned on Thursday that inflation is expected to remain above target for an extended period. However, the eurozone economy has proved more resilient than expected so far.
What does the ECB rate rise mean for mortgages in Spain?
The most immediate concern for many homeowners is the effect on variable-rate mortgages in Spain.
Most Spanish variable mortgages are linked to the 12-month Euribor. Although the ECB does not set Euribor directly, expectations about ECB interest rates have a major influence on where the benchmark moves.
Euribor was officially 2.954% in August, according to Banco de España, up from 2.855% in July and 0.840 percentage points higher than a year earlier.
During the first part of September, however, Euribor has moved back above the 3% mark as financial markets anticipated today’s ECB decision.
That means people whose variable mortgages are due for their annual or six-monthly review could see their monthly payments increase.
Someone with a €150,000 mortgage over 25 years, for example, could see their payment rise by around €75 a month, or approximately €900 a year, if their mortgage is reviewed annually against current Euribor levels. The actual increase will depend on the outstanding mortgage balance, remaining term, agreed margin above Euribor and review date.
People with fixed-rate mortgages will not see their existing monthly repayments change as a direct result of today’s ECB decision.
New mortgages and loans could become more expensive
Higher interest rates can also affect people planning to buy a home.
Banks’ own financing becomes more expensive when rates rise, and some of that additional cost can eventually be passed on to borrowers through mortgage and loan pricing.
After a period in which Spanish banks competed aggressively for mortgage customers, borrowers may therefore find lenders becoming more cautious about the rates and conditions they offer.
The effect is not confined to mortgages. Car loans, personal loans and other forms of borrowing can also become more expensive when interest rates remain higher.
For anyone currently comparing mortgages, the changing environment makes it particularly important to look beyond the initial headline rate and compare the total cost, conditions and whether the mortgage is fixed, variable or mixed.
Better news for savers
However, there is another side to higher interest rates.
Savers could potentially benefit as banks compete for deposits. Accounts paying interest, fixed-term deposits and other conservative savings products generally become more attractive when rates rise.
Some fixed-term deposits available in Spain are already offering returns above 3%, although rates and conditions vary considerably between providers.
Spanish savers should not assume their existing bank will automatically increase the interest it pays following an ECB rate rise. Banks decide individually how much of higher rates they pass on to depositors, making comparisons between accounts increasingly worthwhile.
Why has the ECB raised rates?
The ECB’s central concern is inflation.
Energy costs have risen sharply amid continuing instability in the Middle East, pushing inflation across the eurozone to 3.3% in August.
The ECB now believes inflationary pressures could prove more persistent than previously expected. Lagarde said on Thursday that the Middle East conflict continues to generate inflation pressure and that inflation is likely to remain well above the bank’s target for an extended period.
At the same time, the eurozone economy has shown greater resilience than some economists expected, giving policymakers more room to increase borrowing costs in an attempt to bring inflation under control.
Could interest rates rise again?
Today’s increase may not necessarily be the last.
The ECB has not committed to another rate rise, with Lagarde stressing that decisions will continue to be made meeting by meeting according to inflation, economic growth and incoming data.
However, financial markets are already considering the possibility of further increases if inflation remains stubbornly high.
For mortgage holders in Spain, that makes Euribor particularly important to watch over the coming months. September has already started above 3%, compared with August’s official average of 2.954%.
Whether that increase continues will determine how much pressure households with variable-rate mortgages experience when their loans are next reviewed.
For now, today’s ECB decision confirms that the period of falling borrowing costs has reversed, at least temporarily, and households with mortgages, loans or savings in Spain may increasingly notice the difference.