Average mortgage payments in Spain increased in January by 275 euros per month

by Lorraine Williamson
average mortgage payments

 MADRID – The Euribor rose in January to a new maximum since 2008. This makes the average mortgage payments in Spain €275 more expensive per month. 

The index used to calculate mortgage payments has risen to a level not seen since December 2008. This is due to the rise in official ECB interest rates. In January, the Euribor already reached 3.3%. That made the average mortgage €275 more expensive per month. Consequently, families who update their mortgages based on a variable rate in the coming weeks will go from about €534 per month to €820, according to calculations by ElDiario.es. That is around €3,000 more on an annual basis. 

A year ago, Euribor was still negative (-0.477%). But families taking out a mortgage today or changing from variable to fixed are also affected by this increase.

Double damage for families 

The damage is double for families because this increase comes on top of the loss of purchasing power due to inflation. In 2022 as a whole, it was around 8%. For an average salary, that means a bite of about €2,000. That does depend on how the expenses are distributed and taking into account the prices that have risen the most (electricity, fuel and food) are basic needs. Therefore, it can hardly be reduced. 

Data from the Bank of Spain show that demand for mortgages is already suffering from these rate hikes and inflation. Since the maximum mortgage amount was reached in July 2022, it has been slowly falling. 

This response is part of the strategy of the European Central Bank (ECB), which aims to fight inflation by curbing not only consumer spending but also corporate investment and the financing capacity of states. 

Interest rates continue to rise 

The Governing Council of the ECB meets next Thursday. Then the official ‘price’ of money is expected to rise another 0.5 points to 3%, after moving from 0% to 2.5% since July. 

The latest comments from the bankers who make up the ECB’s main decision-making body suggest a similar increase in February. And another similar increase in March (one point more in total) until official interest rates remain at 3.5%.

“Inflation still too high” 

Christine Lagarde, President of the ECB, said in her speech at the World Economic Forum in Davos: “Inflation is still too high, and it will be necessary to continue to contain it.” What she talks about limiting means that the rise in the cost of mortgages and loans is seriously affecting the ability of households and businesses to consume. 

See also: Euribor above 3 per cent for the first time since 2008 

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