Euribor nears 3% in July as borrowing costs bite

Euribor at historic highs: the reckoning with the era of cheap money

After a European Central Bank (ECB) meeting, Spain's most widely used mortgage benchmark has reached levels close to 3% in July, marking the end of an era of negative rates. The rise in the Euribor, which came close to 2.993% in this July 2026 period, is the tangible reflection of the structural change taking place in the European economy.

The property market, traditionally seen as a thermometer of financial health, presents a complex duality. While interest rates are rising and the cost of borrowing is evident, housing dynamics suggest that rate hikes alone are not cooling the market.

The demand paradox: who sets the price?

Economic theory holds that rising rates should cool the mortgage market. However, the most detailed analyses indicate that the housing supply in certain key areas (Madrid, Barcelona, Valencia) remains frozen. Faced with this scarcity, solvent demand — including international buyers or those with high purchasing power — acts as the main driver of prices. In this scenario, the lever of interest rates becomes less influential on the final price than the size of the demand pool.

This phenomenon is particularly relevant when considering the composition of the Spanish mortgage market, where, according to recent data, 60.9% of new transactions are carried out at fixed rates, while 39.1% trinc variable rates.

The real cost of money and the role of the banks

High inflation, which has hit records in certain segments since the pandemic, is forcing central banks to tighten credit conditions. But the cost of this adjustment is not uniform. Technical analyses point out that banks, by creating credit through mechanisms such as swaps, transfer the risk. Under this scheme, it is the retail depositor who bears the burden when market rates spike.

The debate about the economic future is equally tense. While some observers warn of an imminent deflationary phase as a way of purging the system, others point out that debt keeps growing despite higher corporate revenues. The scenario is one of prolonged agony, where the adjustment is constantly patched up to avoid an immediate collapse.

The economic cycle without pause

The reality is that economic cycles, as seen in the past, are long and painful. What was once a myth about the inevitable bubble is now lived day by day. The financial market offers no quick fixes; it only prolongs the agony, waiting for the next turning point.