Mortgage rates for non-residents: Spain’s position in the European landscape

Here is our March 2024 update with the latest data on Spanish mortgage rates for non-residents from the European Central Bank

 
One question we get from our customers nearly daily is: How expensive are the mortgage rates in Spain vs other European countries?

So, we were due to do some work on that and here is the result. At the same time, we took the opportunity to increase our databases and this article will be updated later. Please note that all the charts are interactive and, whenever we update our database, the charts will be updated.
 
Thanks to our network of local partners, we get the best mortgage rates in Spain if you want to finance your home in Spain. Take 30 seconds to fill this quick form to get the best Spanish mortgage rates as a non-resident.

 

1. Mortgage rates in Spain for non-residents: our 2 minutes video

    
   Would you like to watch this video in your language? Click at the bottom right of the video on “cc” to get subtitles in your language.
   

    

2. Navigating the Mortgage process as a non-resident in Spain

    
   While many international buyers prefer to purchase their Spanish second home outright with cash, this approach might not always be the most strategic. Even if you have the means for an all-cash transaction, considering a mortgage could unlock a suite of financial benefits. From diversifying your investments and increasing liquidity to optimizing tax efficiencies, the advantages are compelling. Intrigued? We invite you to journey with us through the upcoming sections, where we’ll unveil the nuanced benefits of leveraging a mortgage for your property in Spain—a decision that could redefine your financial strategy.
    
   Securing a mortgage in Spain as a non-resident is a feasible endeavour, though it does come with its unique set of challenges and considerations. Given that the majority of your assets are likely situated outside of Spain, Spanish banks will meticulously evaluate both your personal financial profile and the property in question to mitigate their risk exposure. Generally speaking, the terms offered to non-residents may be more conservative compared to those available to residents. This often translates to less favourable interest rates, stricter borrowing criteria, and a reduced loan-to-value ratio, meaning you might need to provide a larger down payment. Additionally, the process might involve more comprehensive documentation and a longer evaluation period to thoroughly assess the viability of extending credit under these circumstances. Understanding these nuances and preparing accordingly can smooth the path to acquiring your Spanish property.
    
   
   
   
    

3. Comparing Spanish Mortgage rates with European averages

    

   Spanish vs. European Real Estate financing

    
   Thanks to the detailed database of the European Central Bank that we could import, we could run a thorough analysis of mortgage conditions for all the European countries vs Spain. Before jumping on detailed statistics on different mortgage solutions we looked at general conditions for mortgage rates both in Europe and in Spain.
   All Mortgages issued in Spain in January 2024 had an average interest rate of 3.7%  (vs 3.1% in January 2023) while all mortgages issued in Europe had an average interest rate of  3.87%  for the same period (vs 3.19% in Spain in January 2023).

   The chart below clearly demonstrates a strong correlation between Spanish mortgage rates and their European counterparts. Both datasets, meticulously compiled by the European Central Bank, serve to monitor financial trends across the region. Historically, from January 2014 to April 2022, Spanish mortgage rates were consistently higher than the European average, marking a more expensive borrowing climate within Spain. During this timeframe, the average Spanish mortgage rate stood at 2.02%, in contrast to the slightly lower European rate of 1.87%, indicating a notable 0.15% disparity that disadvantaged both the Spanish property market and prospective homeowners.
    

   Spanish mortgage rates are cheaper than European ones

   A new trend started in 2022

    
   However, the trend reversed post-April 2022, as Spanish mortgage rates began to align with or dip below the European average. As of January 2024, the most recent data point at the time of this analysis, the average mortgage rate in Spain had settled at 3.7%, marginally below the European average of 3.87%.

   This shift represents a significant 0.17% advantage, benefiting both the Spanish real estate market and its investors: Spaniards and foreigners, and reflects a notable improvement in the affordability and attractiveness of Spanish mortgages relative to the broader European landscape.

   Now that we analyzed all the mortgages issued in both Europe and Spain, it is time to compare rates for different mortgage solutions. As you know mortgage rates are separated in two big categories:

   • fixed rates mortgages, mostly mortgages that will keep the same rate over the full mortgage length, usually between 10 and 25 years,
   • variable rates mortgages, mortgages that will change rates over the life of the mortgage (monthly, yearly, or every five years)

    
   In the following analysis, we will delve further into the nuances of four distinct mortgage categories: variable-rate mortgages, fixed-rate mortgages with terms of 1-5 years, those spanning 5-10 years, and fixed-rate mortgages with a term of 10 years. Notably, variable-rate and 10-year fixed-rate mortgages stand out as the most popular choices among individuals financing their home purchases, both across Europe and specifically within Spain. This comparison aims to illuminate the characteristics and trends that define each category, providing a comprehensive overview of the Spanish mortgage landscape.

   Here are all the evolutions and a quick analysis for each:
    

   Variable Mortgage rates: Spain vs Europe showdown

    
   As you can see on the chart, Spanish mortgage rates since April 2022 were nearly always cheaper than mortgages in Europe, as of January 2024, they are cheaper by 0.76%.

    

   1-5 years fixed Mortgage rates face-off: Spain vs Europe

    

   As you can see on the chart, Spanish mortgage rates with fixed rates between 1 and 5 years are one of the only Spanish mortgage rates for which you will pay more than in other European countries, on average, as of January 2024, you will pay 0.21% more.

    

   5-10 years fixed Mortgage Rates: Spain vs Europe head-to-head

    
   As you can see on the chart, fixed Spanish mortgage rates (5 to 10 years) were nearly always more expensive in Spain than in other European countries. Interestingly, as of January 2024, Spanish mortgage rates trade close to the European average, i.e. no more premium as in the past.

    

   10-Year fixed Mortgage rates in Spain versus Europe

    
   As you can see on the chart, Spanish mortgage rates since March 2022 are cheaper than mortgages in other European countries, as of January 2024, they are cheaper by 0.36%. This is very good news for real estate buyers in Spain.
    
   At the end of this article, we provide a precise comparison between mortgages issued in different European countries and Spain, have a look at where your home country is!
    
   Read more on the subject: What are the best Spanish mortgage rates?

 

4. Key factors behind the advantageous Spanish Mortgage rates

    
   Thanks to our detailed update, now you know that the Spanish mortgage market is experiencing a confluence of positive factors that set it apart from other European counterparts:

   • Spanish property values remain attractively priced when juxtaposed with other European real estate markets, presenting a compelling value proposition and a lower risk for lending banks, just contrary to what we had in 2008,
   • The Spanish economy exhibits resilience and robustness, outpacing the broader European economic performance, which instils confidence in both domestic and international investors,
   • The impact of energy price fluctuations has been mitigated effectively in Spain since the escalation of geopolitical tensions in Ukraine, contributing to a more stable cost of living and operating environment,
   • Spain’s inflation has consistently been lower than the European average, preserving purchasing power and contributing to the overall economic stability,
   • The Spanish real estate sector is characterized by its prudence and lack of speculative excess, evident in the modest percentage of transactions involving mortgages (66%) and the conservative loan-to-value ratio averaging 60%. This reflects a healthy level of leverage and risk appetite in the market.
   • The strength of the general economy in Spain suggests that Spanish banks are in a sound financial position, enabling them to offer attractive financing options without resorting to aggressive lending practices. This financial stability is likely to support continued favourable mortgage rates.

   These elements collectively create a conducive environment for the advantageous spread in Spanish mortgage rates, underscoring the market’s resilience and appeal to a broad spectrum of investors. Additionally, the prudent regulatory framework and proactive fiscal policies may further bolster the market’s attractiveness, potentially leading to sustained growth and stability in the Spanish real estate sector.
    



Why Spanish mortgage rates are less expensive than in other European countries?

 

5. What are the advantages of obtaining a Mortgage in Spain as a non-resident?

    

   Increase the return on your Spanish property investment

    
   The main advantage of buying a property in Spain, is that current real estate levels are not crazy if you compare those to other European countries.
   Read more on the subject: What return will you make on your Spanish property?

   Even with current mortgage rates, getting a mortgage is easier than getting a loan for something else as a person as the bank has the property as collateral. So, while we always encourage our customers to manage risks and don’t overleverage, getting a mortgage before buying a property is in our mind a wise way to diversify your financial assets.
   Last but not least, but depending on your home country, real estate assets could be less taxed than other financial assets.
    

   Diversify your investments

    
   By taking a mortgage, you can decrease your risks by keeping some funds for other investments.
    

   Potential tax benefits and how to maximize them

    
   Buying a property with a mortgage can give you some real tax benefits if you put your property on the rental market afterwards as a “Buy to let” or an investment property. Ask our tax advisors for more on that.
    

Advantages of Spanish mortgage rates for UK residents

 
In the mortgage landscape, UK banks are known to promote variable-rate mortgages, nudging customers towards options that fluctuate with the market, despite the inherent uncertainty in future repayments. Meanwhile, Spanish banks are more accommodating of fixed-rate mortgages, offering borrowers the chance to lock in a stable and predictable payment schedule throughout the loan term, contrasting with the UK’s bank-driven preference for variable rates.
 

Spanish mortgage rates for US residents

 
In the US mortgage market, fixed-rate mortgages are predominant, offering long-term stability with terms commonly set at 30 years, allowing homeowners to lock in rates for the duration of their loan. This contrasts with the Spanish market, where, despite a growing preference for fixed-rate options, mortgages typically have shorter terms and the market historically leaned more towards variable rates, influenced by the Euribor. Additionally, the US market is characterized by its diversity in loan products and a more developed secondary market for mortgages, which enhances liquidity and flexibility in terms and conditions, unlike Spain, where the market is more traditional and less varied in its offerings.
 



Benefits for a non-resident of financing his property in Spain with a mortgage.

 

6. How to get the best mortgage rate as a non-resident in Spain?

    

   Have the best customer profile for the Spanish bank

    
   Here are some insights into what constitutes an attractive customer profile for securing a mortgage:

   • Employment and stability: Ideal candidates are employed with a stable and substantial income.
   • Creditworthiness: A favourable credit history with minimal debts relative to income is crucial.
   • Debt management: A healthy debt-to-income ratio below 35. This means that monthly net income would be at least three times greater than debt repayments.
   • Property value: 1/ The chosen property should hold strong resale potential. 2/It should be priced appropriately within the current market. 3/It should be in a location with consistent demand.
   • Geographic consideration: Applicants from OECD countries are often preferred due to stringent anti-money laundering regulations across Europe. Being an EU resident simplifies the process further. 
   • Maximum loan amounts for non-residents: Spanish banks would like to keep that under control

    

   Don’t take a too big mortgage compared to the property value

    
   As a non-resident, you’re eligible to secure a mortgage for your second home or investment property. Given that your assets are not located in Spain, banks will require guarantees and generally cap the loan-to-value (LTV) ratio at 70%. The LTV ratio represents the portion of the property’s pre-tax value that can be financed through a mortgage. This percentage serves as a general guideline. Feel free to request a complimentary consultation from our mortgage broker, who is well-versed in the process and familiar with Spanish banks that are favourable towards foreign clients. The lower this ratio is, the lower the risk for the bank and the better rate for your mortgage.
    



How to get the best rates as a non-resident.

 

7. Useful considerations for your Spanish mortgage as a non-resident

    

   Processing time for Mortgage applications

    
   On average, mortgages are processed quickly but keep in mind, that you need to prepare a full file so the bank can establish your credit profile. Our partner will work on that with you. Don’t worry.
    

   Higher interest rates and reduced loan amounts for non-residents

    
   In general, foreigners will get slightly less good conditions than Spaniards for their mortgages. This is normal as foreigners don’t have all their financial assets and incomes based in Spain. With a good credit profile and a reasonable loan to value, our customers get nice quotes.
    

   NIE number for non-residents

    
   Acquiring an NIE number is a fundamental step for non-residents looking to navigate the property and mortgage landscape in Spain. This identifier serves as your tax identification number. It is essential for a variety of legal and financial transactions, including the purchase of property and the application for a mortgage. Fortunately, obtaining an NIE is a straightforward process. Your legal representative can handle on your behalf, should time constraints be an issue. For a detailed guide on acquiring your NIE and its importance, we invite you to explore our comprehensive article: Your Spanish NIE number, and how to get it..
    



Useful considerations for a non-resident to get a Spanish mortgage

 

8. Comparing Mortgage rates in Spain vs. selected European countries

    
   Before checking the evolutions of the mortgage conditions between Spain and a few countries, let’s have a look at what is the current situation as of January 2024. Here is the evolution of the different European markets sorted alphabetically, as a reminder, Spanish mortgage rates and European mortgage rates were at 3.87% and 3.70% respectively as of the end of January 2024.
    

   European mortgage rates January 2024 leaderboard

    

   • Belgian mortgage rates are issued with a 3.69% rate on average in January 2024
   • Dutch mortgage rates are issued with a 4.04% rate on average in January 2024
   • Finnish mortgage rates are issued with a 4.12% rate on average in January 2024
   • French mortgage rates are issued with a 3.59% rate on average in January 2024
   • German mortgage rates are issued with a 3.85% rate on average in January 2024
   • Irish mortgage rates are issued with a 4.25% rate on average in January 2024
   • Italian mortgage rates are issued with a 3.98% rate on average in January 2024
   • Luxembourg’s mortgage rates are issued with a 4.33% rate on average in January 2024
   • Portuguese mortgage rates are issued with a 4.03% rate on average in January 2024

    
   Here is the same information presented in a column chart:

    

   Belgian mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Spanish mortgage rates and Belgian mortgage rates are close to each other in January 2024. As of January 2024, Belgian mortgage rates were issued at 3.69%.

    

   Dutch mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Spanish mortgage rates and Dutch mortgages are more expensive than Spanish mortgage rates by 0.30%. In January 2024, Dutch mortgage rates were sold at 4.04%.

    

   Finnish mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Spanish mortgage rates since March 2022 are cheaper than mortgages in Finland, as of January 2024, they are cheaper by 0.42%. This is very good news for real estate buyers in Spain. In January 2024, Finnish mortgage rates were sold at 4.12%.

    

   French mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, French mortgages are less expensive than Spanish mortgage rates in January 2024. They trade at 3.59%

    

   Irish mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Irish mortgages are much more expensive than Spanish mortgages. As you will surely know, the Irish real estate market rebounded strongly and is one of the hottest markets in Europe even with those higher rates. In January 2024, Irish mortgage rates were trading at 4.25%, 0.55% higher than Spanish mortgage rates.

    

   Italian mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Italian mortgages are much more expensive than Spanish mortgages. In January 2024, Italian mortgage rates were trading at 3.98%, 0.28% higher than Spanish mortgage rates.

    

   Luxembourg mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Luxembourg mortgages are much more expensive than Spanish mortgages. In January 2024, Italian mortgage rates were trading at 4.33%, 0.63% higher than Spanish mortgage rates. As you know probably, the Luxembourg real estate market has a very high valuation and we could see this as banks being prudent or instructed by the European Central Bank to be prudent.

    

   Portuguese mortgage rates vs. Spanish mortgage rates evolution over the last 20 years

    
   As you can see on the chart, Portuguese mortgages are much more expensive than Spanish mortgages. In January 2024, Italian mortgage rates were trading at 4.03%, 0.33% higher than Spanish mortgage rates. The Portuguese real estate market had a nice run too had we could see some caution from Portuguese banks.

    

9. Further readings

    

   • Read more on current financing conditions in Spain with our detailed article: What are the best Spanish mortgage rates?
   • Hesitating between fixed or variable rates on your mortgage (in Spain or elsewhere) have a look at our detailed insights: How do I choose between fixed and variable rates for a mortgage?
   • Last but not least don’t miss our detailed ultimate guide to your Spanish mortgage
   • If you need a mortgage pricer for your Spanish mortgage, check our article for more.