During the height of the Spanish market boom mortgage rates became cheap, very cheap. Spanish banks were so eager to lend that variable interest rates well below 1% plus euribor were not uncommon. In subsequent years rates increased significantly and many Spaniards were overwhelmed by the increase in their adjustable rate mortgage.
After the demise of the market the banks are once again getting to a healthier financial position and they are eager to loan money. Credit cards and small loan offerings are being promoted through every vehicle possible, snail mail, e-mail and text messages on our phones and on banking websites.
Variable Rate Loans in Spain
Although lending standards have returned to sanity, banks are now very eager to hand out mortgages to anyone who qualifies. Adjustable rate mortgages are starting at around 1% plus euribor for many banks, with the standard requirement of depositing your work payments and getting house insurance and life insurance to cover the loan. Some banks will offer even better rates but they require you to purchase more products like investment vehicles or pension plans.
Fixed Rate Loans in Spain
The most stunning thing about mortgages currently being offered in Spain is the possibility to acquire a fixed rate mortgage at a decent rate. Some banks are going as low as 2.5% whereas in the past, even during boom years, the very best you could do was around 4%.
Here are some of the best mortgages currently being offered in Spain:
Bankinter is offering a very low fixed rate of 2.3% for up to 20 years. For 15 years you can get 2.15% and for 10 years you get 1.90%. They don’t seem to require you to sign up for anything extra to get these rates but they charge a 1184€ fee for opening the loan.
Abanca is offering 0.95% + euribor variable rate loan, the lowest in the Spanish market without having to purchase more than the standard products. Abanca is also offering a very good 2.25% fixed rate for up to 30 years.
Santander is Spain’s largest bank and is surprisingly offering a nice 2.5% fixed rate without having to purchase extra products.
We have to mention that some banks are offering products that are of little interest to households or investors. ING Direct is such an example. They offer a fixed rate for 10 years and then variable/adjustable rate. So the homebuyer would pay a 2% fixed rate, currently double that of what most banks are offering and then the rate would adjust with the euribor after the 10 year period is up. So basically you would be overpaying for 10 years and then your mortgage will continue to rise as the euribor rises. We know it will rise because now it’s at historic lows. So you overpay now and then risk the uncertainty of the euribor afterwards. This is a poor product from what is otherwise a bank that offers good service.
In general, now is an ideal time to buy property in Spain. Prices are slowly increasing again and mortgages are fairly cheap.