Mortgages and Euribor: How are they related?

We'll explain how the evolution of Euribor affects your mortgage.
Mortgages and Euribor are two closely connected terms. If you are thinking of taking out a mortgage, you will know that Euribor is a key component to take into consideration. as it heavily affects the monthly instalments.
Upper banner Fixed-rate mortgage Upper banner Fixed-rate mortgage
BBVA Fixed Mortgage
Enjoy the peace of mind of paying the same amount every month, with no surprises.
In order for you to understand the relationship between a mortgage and Euribor, you need to understand what this rate consists of. Euribor is an acronym of Euro Interbank Offered Rate. It is the interest rate at which a large number of banks offer short-term loans, and, therefore, it is in a constant state of fluctuation. This constant oscillation of the Euribor is what determines the fluctuation of the fee to be paid, which is usually revised half-yearly or annually. Mortgages and the daily Euribor are so closely connected that the interest of mortgage products depends decisively on this reference rate.

The impact of rises and falls in Euribor on mortgage repayments

The relationship between mortgages and Euribor normally depends on the 12-month Euribor rate (however, it can be indexed at different Euribor terms -6 months-). If the Euribor rises, there is an increase in payments of variable-interest rate mortgages, since they are dependent on the evolution of this reference rate. If the Euribor falls, mortgage payments also go down.

There are primarily three types of mortgages available these days: those with fixed interest rates, those with mixed rates (fixed rate for the first years, then variable rate for the rest of the loan), and those with variable interest rates. These are the most popular types in Spain. Therefore, the difference between taking out a variable-rate mortgage and a fixed-rate mortgage lies in the inclusion of a fixed differential added to the Euribor rate in a variable-rate mortgage, versus paying a fixed amount on a permanent basis in a fixed-rate mortgage.

Central banner Central banner
We have the mortgage that is best for you
Discover BBVA mortgages and find the right one for you.

Other factors to consider apart from Euribor

With a variable-rate mortgage based on the Euribor, you must always pay attention to the margin being added to this reference rate. The fixed differential, which is set by the bank and is added to the variable Euribor, forms part of the interest rate. Banking institutions set the fixed differential in their contract conditions and it usually varies from one bank to another. -Now that you understand the relationship between mortgages and Euribor, why not request a mortgage assessment?
CTA Study CTA Study
Mortgages - You might also be interested in Mortgages - You might also be interested in

You might also be interested in

  • Do you know why the Euribor varies? We'll explain what this rate consists of and why it varies on a daily basis.
  • Do you know what a mortgage credit facility is? At BBVA, we'll explain what it is and how it differs from a mortgage loan
  • Regardless of a property's appraisal value, all real estate has an official cadastral value registered for tax purposes.