The European Central Bank did not raise rates on 29 October, but it came close. The Governing Council kept the deposit facility rate at 2.50%, the main refinancing rate at 2.65% and the marginal lending rate at 2.90%. Christine Lagarde told the press conference that the council "debated whether a hike was appropriate" before deciding unanimously to wait for more information. Five days later, on 4 November, Spain's official gazette published the October Euribor: 3.239%, a fraction below September's 3.247%.
For anyone with a variable-rate mortgage in Spain, or planning to take one out to buy a home here, the two numbers tell the same story. Rates have paused, not turned. Below: what the ECB decided and said, how the Euribor has moved through 2026, what the October index adds to a typical mortgage at its annual review, and what to keep in mind if you are buying before the next decision on 17 December.
What the Euribor is: the interest rate at which European banks lend to each other. The 12-month Euribor is the reference index for almost every variable and mixed mortgage in Spain. Your rate is the Euribor plus a fixed margin set in your deed, and it is recalculated once or twice a year using the official monthly average published by the Banco de España.
What the ECB decided on 29 October
This was the first meeting since the ECB raised rates twice this year: on 11 June, from 2.00% to 2.25%, and on 10 September, to 2.50%. In its statement the council pointed to energy prices, which "have continued to rise, posing upside risks to the inflation outlook". Euro area inflation was 3.8% in September. The ECB also noted that mortgage rates in the euro area rose to 3.6% in August and that demand for mortgages "declined substantially given higher interest rates".
On December, Lagarde was unusually direct. The next meeting comes with new staff projections, and "unless there was a major development, the direction of travel is quite clear for all of us." She added that the pause "does not indicate that we will not be hiking". The same day, the ECB announced that Lagarde will step down as president on 7 February 2027, before the end of her term.
| ECB decision | Deposit facility rate | Effective from |
|---|---|---|
| June 2025 | 2.00% | 11 June 2025 |
| 11 June 2026: first hike | 2.25% | 17 June 2026 |
| 10 September 2026: second hike | 2.50% | 16 September 2026 |
| 29 October 2026: hold | 2.50% | unchanged |
| 17 December 2026 | next decision | with new projections |
What the markets expect: after the meeting, money markets priced roughly a two-in-three chance of a hike to 2.75% in December, according to LSEG data reported by CNBC; other estimates are higher. Deutsche Bank expects "one more hike to 2.75% in December" and then the end of the cycle. These are forecasts, not decisions.
The Euribor in 2026: a pause at the top
The Euribor moves ahead of the ECB, because it reflects what banks expect rates to be over the next year. It started rising in spring, jumped in September after the second hike, and held its level in October. The official monthly averages, as published by the Banco de España in the BOE:
| Month | 12-month Euribor (monthly average) |
|---|---|
| October 2025 | 2.187% |
| June 2026 | 2.798% |
| July 2026 | 2.855% |
| August 2026 | 2.954% |
| September 2026 | 3.247% |
| October 2026 | 3.239% |
October is the first monthly fall after three rises in a row, but only by 0.008 points. The daily rate tells a different story: it closed October at 3.306% and was 3.317% on 3 November, above the October average. If the ECB raises rates in December, the indices used for reviews in early 2027 are likely to be higher than the one just published.
What the October Euribor adds to a mortgage review
Variable mortgages in Spain are usually reviewed once a year. A loan last reviewed with the October 2025 index (2.187%) and now reviewed with the October 2026 index (3.239%) takes the full increase of 1.052 points. The table shows the effect on two typical loans, calculated on the balance that remains after the first year of payments.
| Mortgage | Monthly payment, October 2025 index | Monthly payment, October 2026 index | Difference |
|---|---|---|---|
| €150,000 over 30 years, Euribor + 0.99% | €646.81 | €733.56 | +€86.75 a month, about €1,040 a year |
| €200,000 over 25 years, Euribor + 0.80% | €947.07 | €1,055.99 | +€108.92 a month, about €1,310 a year |
Key point: compared with a review based on September, the October index changes almost nothing, less than one euro a month on these loans. The real increase is the year-on-year jump of just over a point. Which month's index applies to you is written in your mortgage deed; it is often the index published one or two months before the review date, so the October figure mostly affects reviews in November and December.
What this means if you are buying in Spain
1. Fixed and variable rates are now close
The latest figures from Spain's statistics institute (INE), for August, put the average rate on new home mortgages at 3.08%: 3.16% for fixed loans and 2.95% for variable ones. Almost two in three new mortgages are fixed. With the Euribor above 3.2%, a variable loan with a margin of around one point starts above most fixed offers, and several banks raised their fixed rates in October and November. The choice is no longer about a cheaper starting rate but about whether you want certainty for the full term.
2. Non-residents borrow less and should plan for a higher rate
Spanish banks usually lend non-residents 60% to 70% of the purchase price or valuation, whichever is lower, and terms are often shorter than for residents. Taxes and fees of roughly 10% to 15% of the price come on top and are paid from your own funds. Our guide to mortgages in Spain for foreigners explains the documents, limits and steps. To see how a different rate or deposit changes the monthly payment, use the mortgage calculator.
3. Test the payment at a higher rate before you sign
If you choose a variable or mixed loan, check the payment at a rate half a point to a point above today's. On a €200,000 loan over 25 years, each additional half point adds about €56 a month. If that figure fits comfortably in your budget, a further hike in December will not change your plans.
4. Fewer purchases, higher prices
Higher borrowing costs have slowed the number of sales more than prices. Notaries' data for the first half of 2026 show 62,327 purchases by foreign buyers in Spain, 13% fewer than a year earlier, while the average price they paid rose 9.4% to €2,644 per square metre. Many international buyers on the Costa Blanca and the Costa del Sol buy in cash or with a small loan, so a rate decision changes their budget less than it changes the payment of a buyer who borrows most of the price.
Outlook: one more step in December, then a long pause
The ECB has made clear that a third hike is likely on 17 December unless the data change, and most forecasts see 2.75% as the peak. For mortgage holders, that means the Euribor is likely to stay above 3% into 2027 rather than return to the 2% to 2.5% range of last year. For buyers, the practical conclusion is to budget with today's rates or slightly higher ones and choose the loan type for its certainty, not for a fraction of a point at the start. We will update this article after the December decision.
Sources: European Central Bank, monetary policy decisions and press conference of 29 October 2026; Banco de España, official reference indices published in the BOE (4 November 2026 and earlier months); INE, mortgage statistics for August 2026; Consejo General del Notariado, first half of 2026.
