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The future of mortgage rates in Spain for 2024: Predictions and insights

Predicting the future of mortgage rates in Spain for 2024 might seem like a game of chance. However, several key factors such as economic conditions, central bank policies, inflation rates, and geopolitical events significantly influence these rates.

What to expect from mortgage rates in Spain for 2024

Historical perspective: Mortgage rates in 2023

Understanding past trends can help predict future rates. In 2023, Spain faced high inflation, peaking at 10.8% in July 2022, coupled with increasing geopolitical tensions. These factors contributed to a 25% decrease in signed mortgages in 2023, indicating a slowdown in the real estate market.

Optimistic outlook for 2024

Looking forward, there are signs of optimism for mortgage rates in 2024. Spain’s inflation rate has reduced to 3.5%, and the European Central Bank (ECB) has maintained rates at 4% for the second consecutive month after 10 hikes from July 2022 to September 2023.

Euribor and mortgage demand trends

Evolution of Euribor in 2023

Euribor rates are a crucial determinant of mortgage rates in Spain. In 2023, despite a general market slowdown, Mortgage Direct experienced a significant increase in demand for non-resident mortgages. This trend is likely due to the relatively high mortgage rates in countries like the United States (around 8%) and the United Kingdom (6.5%), making Spain’s 3.5% to 4.5% rates more attractive to non-resident buyers.

Euribor Evolution in 2023, source: euribor-rates.eu

Projections for 2024: Euribor and interest rates

Euribor forecast for 2024

Projections indicate a decrease in Euribor rates by 2024. ING anticipates a reduction in the ECB’s maximum interest rate to 2.5%, while Bankinter forecasts a 12-month Euribor rate of 2.2% by year-end.

Interest rate trends

After peaking in 2023, interest rates are expected to stabilize or decline in 2024, driven by the anticipated cooling of inflation and adjustments in ECB policies.

Real Estate market predictions for 2024

Market stabilization

Experts predict that the Spanish real estate market will stabilize in 2024. Following a period of increased demand and rising prices, the market may cool down, leading to more stable or slightly lower house prices. This stabilization, combined with potential decreases in interest rates, could improve mortgage affordability.

Challenges and opportunities

Entering 2024, the economic landscape remains uncertain, influenced by factors such as inflation, geopolitical tensions, and ECB policies. Despite this uncertainty, the banking sector shows a trend towards innovation in mortgage products, aiming to offer better terms and conditions.

Promising investment areas

For those looking to invest, Madrid, Valencia, and Murcia are highlighted as the most promising regions in the Spanish market.

Conclusion

The outlook for mortgage rates in Spain in 2024 appears positive. At Mortgage Direct, we are committed to securing exclusive mortgage terms for our international clients, ensuring profitable and safe investments.

Contact us today to make your dream of owning a property in Spain a reality.

Simon StaplesMortgage Adviser

Simon has been working in the financial services industry for over twenty years. First as a mortgage adviser at Halifax Bank for twelve years in London and then as a regulated financial adviser for three years at the Lloyds banking group.

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Mortgages taken out in currencies other than the currency in which you earn are considered Foreign Currency Mortgages. Changes in the exchange rate may therefore increase the equivalent value of your debt. Under the Mortgage Law 5/2019 banks in Spain have introduced mechanisms to protect consumers from exchange-rate risk. For more information, please speak to your broker.

Mortgage Direct, S.L. is a company registered in the Registro de Intermediarios de Crédito Inmobiliario del BdE with the nº D108.

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