What is the Euribor?
The Euribor is the average interest rate at which major European banks lend to each other. It is the reference used in many mortgages in Spain.
What the name means
Euribor stands for Euro Interbank Offered Rate. It is published for different terms, and the most used for mortgages is the 12-month one.
How it affects a variable-rate mortgage
In a variable-rate mortgage, the interest you pay is worked out like this:
Interest = Euribor + spread
The spread is a fixed percentage set by the bank. For example, with a 1% spread:
- If the Euribor is at 3%, you pay 4%.
- If the Euribor falls to 2%, you pay 3%.
The rate is reviewed periodically, usually every 6 or 12 months. Between reviews, your payment does not change.
What about a fixed-rate mortgage
With a fixed-rate mortgage, the interest is agreed from the start and the Euribor does not change your payment. Mixed mortgages combine an initial fixed period with a variable one afterwards.
Why it rises or falls
The Euribor depends mainly on the European Central Bank's interest rate decisions and on what the market expects it to do. When rates are expected to rise, the Euribor usually rises beforehand. It can even be negative: it was for several years, until 2022.
Where to check it
It is published daily and the main economic websites report it. If you have a variable-rate mortgage, check your contract for when it is reviewed and which Euribor term it uses.
The Euribor is Europe's reference rate. In a variable mortgage you pay Euribor plus a spread, so when it moves, your payment changes at the next review.
Informational and educational content. Not financial advice.