In March, Spanish families faced an unexpected financial challenge: the euríbor, the key benchmark for calculating interest rates on variable-rate mortgages, recorded its most significant monthly increase in the past three years. This was driven by the ongoing conflict in Iran, which has affected global markets and Spain’s economy for over a month. As a result, many households will see higher monthly loan payments, a burden further amplified by rising fuel prices and other essential goods.
The average euríbor rate for March reached 2.532% just two days before the month ended. This led to higher payments for both annual and semi-annual rate reviews. For example, on a €150,000 loan over 25 years with a one-point differential, the monthly payment rose to €753.51. Over a year, that’s an additional €129, and with a semi-annual adjustment, nearly €172 extra over six months. For €300,000 mortgages, the increase is even more pronounced: the monthly payment now stands at €1,507, which is €21.50 more per month with an annual review and €57.40 more with a semi-annual review.
Pressure on household budgets
The rise in Euríbor has coincided with higher fuel prices, further straining household budgets. This year, diesel prices hit record highs during Easter, while oil and gas costs have continued climbing since the start of the Middle East conflict. There are concerns that the increased cost of transportation and energy will drive up food prices and inflation. Banks, unprepared for these developments, are now forced to reconsider their strategies, since a possible interest rate hike could slow economic growth more than previously expected.
At the beginning of March, Euríbor was at 2.229% on the daily rate and had climbed to 2.86% by month’s end. During this short period, the market saw some of the sharpest daily spikes since 2008, when the global financial crisis erupted. Analysts point out that such high volatility could lead to further increases in the index in the coming months if the regional situation fails to stabilize.
Changes in the lending market
The rise in Euríbor affects not only existing loans but also the conditions for new mortgages. Banks have already begun tightening borrower requirements and raising rates on new loans, fearing a surge in defaults if the crisis drags on. Securing a mortgage is becoming more difficult, and borrowing costs are rising. This could reduce housing demand and slow activity in the real estate market.
However, according to russpain.com, the current situation differs from previous crises: the level of overdue debt in Spanish banks remains at a historic low—2.71% as of January. This is because, after past economic shocks, families and companies actively reduced their debts, which has allowed the banking sector to remain resilient even amid new challenges.
Forecasts and expectations
Among the few forecasts that factor in the impact of the conflict are the estimates from Bankinter: in their view, the 12-month euríbor could remain in the range of 2.30–2.45% this year and next. This offers hope that sharp further increases are unlikely, though uncertainty remains. At the same time, if the situation on energy markets worsens, inflation could accelerate again, and with it—interest rate hikes.
In recent years, Spaniards have already faced similar situations. For example, in 2022, after the conflict broke out in Ukraine and energy prices surged, the euríbor also rose sharply, leading to higher mortgage payments and tougher lending conditions. At the time, banks and borrowers sought compromises to avoid mass defaults. Now, despite new challenges, the banking sector appears better prepared and the level of overdue payments remains low. However, further developments will depend on global market dynamics and central bank decisions.
