The war in the Middle East has destroyed the calm of those with variable rate mortgages: it has broken a streak of two consecutive years in which annual reviews had lowered installments and alleviated the mortgage burden on families. The one-year Euribor, used as the main reference to set the interest rate, stood at 2.565% in March, compared to 2.221% the previous month. Taking the last 12 months as a reference, the index registers an increase of 0.167 points. Although the increase is not yet very pronounced, it has had a direct impact on the pockets of thousands of people and an adjustment in family spending. “The annual review increases the fees between 20 and 30 euros per month, depending on the outstanding capital,” they indicate in the mortgage comparator and advisor iAhorro. Uncertainty has taken over those with mortgages and those who aspire to become one in the coming months. They need to know if the increases are temporary or are going to worsen and how they can defend themselves from the attacks of the Euribor. Regarding the first question, everything will depend on whether the two-week ceasefire between the United States and Iran is credible and, above all, whether it culminates in lasting peace. Obviously, this scenario could alleviate the index. In any case, the situation appears much more volatile than it seemed just a few months ago and the European Central Bank (ECB) has revised upwards its inflation forecasts for 2026 to 2.6%, moving away from its objective of 2%. “The Euribor has already risen and an upward trend or rate fixation at levels higher than those expected a few months ago seems likely,” says Enrique Lasaosa, head of Innovation and Development of Products and Services in the Retail Business Area of Ibercaja. Ricard Garriga, CEO and co-founder of the digital mortgage platform Trioteca, believes that, in the short term, “it is reasonable to think about a range of movement between 2.4% and 3%, as long as the current uncertainties are not resolved.” Jorge González-Iglesias, founder of the mortgage broker Gibobs, does not expect a quick return to lower rates either. “Rather than a scenario of aggressive increases, the market points to gradual adjustments, but with a clearly more restrictive bias than that anticipated a few months ago.” And remember that an increase of half a point can mean around 50 and 60 euros more per month on an average 30-year mortgage of 200,000 euros, depending on the differential applied. “It is not a critical impact, but it is relevant for tight family economies.” Although mortgage decisions must be looked at in the long term, there are formulas to protect a variable mortgage from these increases in the Euribor (and those that may arrive). Early repayment is one of them: it allows you to save money on interest and, at the same time, reduce the payment or repayment period. Now, it only makes sense if you have enough savings to amortize capital and maintain a cushion for emergencies; if the mortgage is in the first years of the term because most of the interest is paid in that period, and if the interest is high or is expected to rise in the short term, explains Miquel Riera, head of mortgages at the comparator HelpMyCash. It is also important that the commission for this advance is low or does not exist because some reach up to 2%. Riera formulates two examples. A mortgage of 150,000 euros with a term of 25 years and an interest of 2.5% signed last year whose owner plans to repay 10,000 euros. «If you reduce the term, you will maintain your installment, you will shorten the repayment period by 26 months and you will save about 7,700 euros in interest. And if you reduce the installment, the monthly payment will drop from 673 to 627 euros per month and you will save about 3,300 euros in interest.» On the other hand, if that same mortgage was formalized 23 years ago, the outstanding capital will be 15,700 euros. «If the term is reduced, the interest savings will be about 334 euros and if the payment is reduced, the monthly payment will drop from 673 to 227 euros and the interest savings will be about 252 euros.» In this case, the real economic benefit is much more limited. It is also not worth paying off in the case of mortgage holders who benefit from mortgage relief (up to 15%). “It is not usually the most efficient move when you are in the transitional regime of deduction for habitual residence and a large amortization that year does not add a tax advantage,” says Laura Martínez, Director of Communication and spokesperson for iAhorro. Another parapet is to change the current variable mortgage to a fixed one, a convenient option if there are still many years left on the mortgage and a competitive interest can be obtained. According to the Ibercaja spokesperson, “in recent times, clients have been demanding more fixed or mixed rate mortgages than variable ones.” Some banks have adjusted their fixed rates slightly upwards, but the offer continues to be attractive, especially for solvent profiles. In that sense, says González-Iglesias, “if you have access to a good offer at a fixed rate, it may make sense to close it before the conditions adjust.” The average interest rate is around 2.85%, but the best profiles can opt for offers below 2.5%. For Garriga it is the most interesting option: «Whoever does not change from variable to fixed is because they do not want to, not because they cannot. The market is completely open. The banks are granting changes, there is real competition and we are closing fixed mortgages with average rates around 2.19% NIR.»
Savings of hundreds of euros
With these prices, the savings are immediate. If the Euribor ends up closing the month of April at around 2.8%, plus a differential of 0.78%, the interest will be 3.55%, says Martínez. «In a mortgage of 200,000 euros, that can easily mean about 200 euros per month. Many times it is not a financial decision, but a matter of inertia. And, right now, inertia is very expensive,» says Garriga. There are three ways to carry out the change from variable to fixed or mixed: through an agreement with the bank itself (novation), with the transfer of the mortgage to another entity (subrogation) or through the signing of a new mortgage loan. However, banks usually only accept it if the borrower has a stable income and their credit history is good. Another roadblock against the rise of the Euribor is to negotiate with the entity the differential, which is the part that is added to the Euribor to calculate the interest. “The operation can be especially profitable for those who signed their variable mortgage between 2016 and 2022: at that time, the spreads were around 1% or higher, while the current ones are around 0.60% and it is even possible to obtain less than 0.50%,” says Riera. However, innovations rarely offer truly competitive improvements. “The right approach is not to negotiate downwards with your bank, but to go out into the market and generate competition,” believes Ricard Garriga. One more safe passage is to modify the credit repayment period. If it is extended, the installments will be lower, although modifying the term means paying more interest in the long run, but it allows you to cushion the blow.
