Banks from Spain stand out in the Old Continent, offering the cheapest mortgages in the euro area. Thanks to increasing competition between financial institutions, lending rates on the Iberian Peninsula have fallen by 88 basis points in 2024, a greater reduction than the Eurozone average (66 basis points). Just two years ago, the situation was the opposite, with Spanish loans more expensive than the European average.
Falling interest rates and increased competition
According to data from the European Central Bank (ECB), at the end of 2024, the average cost of mortgages in Spain was 2.9%, lower than the euro area average (3.35%). This compares with a difference of 23 basis points as recently as 2023, which has now increased to 45 basis points.
Spanish banks – taking advantage of the falling Euribor – are successively lowering loan rates in an attempt to attract as many customers as possible. In Germany (3.56%) or France (3.14%), mortgages remain more expensive than in Spain, and in Estonia their cost even reaches 4.5%.
Record growth in new loans
Significant reductions in interest rates have contributed to an increase in interest in loans in Spain. In 2024, the value of newly issued mortgages reached €67.95 billion, an increase of 19.3% on the previous year and the highest figure since 2010.
Banks are focusing on offering fixed-rate loans that provide stability in monthly instalments – regardless of interest rate fluctuations. Leading financial institutions such as Banco Santander are offering 25-year mortgages with fixed rates in the range of 2.93-3.3% APR in 2025. In practice, depending on the customer’s creditworthiness, the actual interest rate may be even lower.
See also:
Mortgage credit in Spain for non-residents
For cash or on credit? Poles buy houses and flats in Spain
The economy is booming, or why you should invest in the Iberian Peninsula
Contrast between Poland and Spain
In 2024, Poland topped the ranking of European Union countries with the highest mortgage interest rates. According to ECB data, in July 2024, the average interest rate on new loans in Poland was 7.83%, the highest in the EU. This compares with 6.73% in Hungary and 6.56% in Romania.
One of the key factors contributing to the limited access to mortgages in Poland is the dominance of offers with variable interest rates. Until 2022, almost all mortgages in the country were granted on such terms. At the same time, the dynamic increase in interest rates since the end of 2021 has led to a sharp increase in loan instalments. Unlike in Spain, the Polish market did not and still does not offer attractive fixed-rate loans, leading to significant volatility and increased costs for borrowers.
