Euribor forecast: where interest rates are heading

The most repeated question in Spanish mortgage forums: is the Euribor going to keep falling? Nobody knows. Anyone who tells you otherwise is guessing — including your bank manager, who has incentives for you to sign today. What you can do is understand the mechanism, watch the signals, and make decisions based on scenarios, not prophecies.

How the Euribor actually moves

The Euribor is not an official rate set directly by the ECB. It is a market index reflecting the rate at which European banks lend to each other. The key point: the Euribor prices in expectations, not current reality. As one community member explained: "The market doesn't price what is happening today — it prices what investors feel will happen in the future. In January, when the ECB didn't cut rates but banks expected them to, the Euribor fell anyway, on sentiment. Then it bounced back when the market realised the cut would take longer."

Direct practical consequence: when the ECB finally cuts rates, the Euribor often barely moves that day, because markets priced it in weeks or months earlier. If you are waiting for an ECB cut to lock in your mortgage, you may have already missed the move. The market moves before the institution.

The rate-cutting cycle (2024-2025)

The ECB started cutting rates in June 2024 and continued through 2025, with the deposit facility rate falling from 4% to around 2% by early 2026. The Euribor tracked this downward trend, though not in a straight line: it anticipated part of the cuts, then rebounded when markets questioned the pace, and gradually consolidated lower as cuts were confirmed.

By November 2025, with the ECB at 2%, one forum participant summarised the situation: "Fixed rates below 1.8% without add-ons haven't been offered since 2021-2022. The most competitive fixed rates today go to high-income borrowers with full product packages." In early 2026, fixed rates range roughly 1.7-2.2% with insurance add-ons, and mixed-rate mortgages with 3-5 year fixed periods can be under 2% at some lenders.

What can derail the forecast

Nothing in economics is linear. The forums have documented several factors that complicated the expected downward path:

Persistent inflation. If inflation rebounds above the ECB's 2% target, cuts slow or pause. In 2025, core inflation running above 2.5% created uncertainty about the pace of cuts.

Tariffs and geopolitics. In April 2025, amid a US-Europe trade dispute, users noted: "Banks won't touch their mortgage rates, and the ECB — I don't know if it will cut if the Fed doesn't." A broker was more blunt: if you have a solid offer approved, lock it in — don't wait.

The US Federal Reserve. The ECB and the Fed don't move in lockstep, but there is correlation. If the Fed keeps rates high, the ECB has less room to cut without weakening the euro.

Supply-chain conflicts. An escalation in the Middle East affecting oil can feed through to energy inflation and delay rate cuts.

What the ECB officially says

The ECB's stated direction over the period covered by this data (2024-2026): a downward trend toward a more "neutral" level, roughly 2% for the deposit rate. That does not mean the Euribor will stay there indefinitely: historically it has ranged from -0.5% to +5%. As one forum member noted with perspective: "Except for the period when they were giving money away after the financial crisis, average rates today are not bad at all. Negative rates were an anomaly."

How this affects your mortgage decision

If you already have a variable mortgage: Your payment adjusts when your reference Euribor is revised (usually annually). If the Euribor keeps falling, you benefit without doing anything. If your spread is low (Euribor + 0.3-0.5%), switching to a fixed rate at current levels may not make financial sense even if fixed rates are at 2%.

If you are looking for a mortgage now: Banks already bake expected Euribor cuts into their fixed-rate offers. Do not wait for the ECB meeting to get a better fixed rate — the adjustment happens before the announcement. As one experienced user put it: "When the ECB cuts and people say it was already priced in, what that means is that markets had anticipated it. If you have a variable mortgage, the Euribor has probably already fallen before the announcement is made."

If you are choosing between fixed and mixed: A mixed-rate mortgage is a bet on continued rate reductions — which is the current consensus. But as someone with historical perspective noted: "Nobody knows what will happen in 10 years. Nobody. And during the fixed period of a mixed mortgage there is usually a 2% early cancellation fee." Run the numbers under several different Euribor scenarios. Do not base your decision on the most optimistic forecast.

The most repeated advice

Nobody in an online mortgage community or at your local bank branch knows where the Euribor will be in five years. What you can control: choosing a risk level you can sustain, not over-borrowing, and keeping enough cash buffer to absorb a bad stretch. As one community member put it plainly: "And in the remote case that someone knows what rate the Euribor will be at — they won't be in a online mortgage community."

Disclaimer: This guide reflects market conditions and forecasts as of early 2026. Interest rates and ECB policy change. Check current data before making any financial decision.