What impact are Trump's tariffs having on mortgages in Spain?
The effects of U.S. President Donald Trump increasing trade tariffs are having are far reaching across the planet, from possibly causing a global trade war and another economic recession, to raising consumer prices and uncertainty in the stock market.
Trump's tariffs are set to affect around 200 countries, including Spain, and are now having an impact on Spanish mortgages too.
The MAGA leader claims the move will revitalise U.S. domestic manufacturing and amount to a "Declaration of Economic Independence', but this could be in detriment to the rest of the world.
European Union products will be subject to a new 20 percent tariff, according to Trump. "For decades, our country has been ripped off. We've been ripped off for 50 years, but that's not going to happen again," the president said, clearly referring to Europe.
This has caused concern among EU countries as to the repercussions and uncertainty the new tariffs will cause, and one of the proposed responses to the chaos caused by Trump is to freeze mortgage prices.
Since June 2024, the European Central Bank has lowered the prices of bank loans, especially mortgages, but that may be set to end.
According to the latest report from the Bank of Spain, the average interest rate on home loans here has seen notable decline this past year, from 3.49 percent in June 2024 to 2.96 percent in January 2025.
But, the European Central Bank has warned that there is a risk that the Consumer Price Index will rise, which will directly influence its monetary policy.
The Euribor, which is the indicator that sets lending rates, has slowed its rate of decline since the beginning of this year.
As a result of this, banks in Spain have already decided to maintain current mortgage prices until the situation changes or until they know what the outlook will be.
Due to the EU's new tariffs and the fact that its members have promised to increasing their military spend (including Spain), the ECB has not ruled out maintaining interest rates at 2.5 percent throughout 2025. However, market consensus suggests it could lower rates to two percent. It will all depend on the evolution of inflation.
The slowdown in mortgage interest rates so far has had no impact on demand, which remains at an all-time high. T
he amount of borrowing is up 27 percent compared to the same period last year and three percent compared to the previous month.
What Trump's tariffs have done is put a spoke in the wheel of Spain's mortgage market, or at least created a lot more uncertainty, as 2025 was looking like a particularly good year to take out an hipoteca (mortgage) in Spain.
To make matters even more difficult, housing prices in Spain continue to rise.
In 2024, according to the General Council of Notaries, the cost of properties increased by 6.9 percent compared to the previous year. And by 2025, institutions such as BBVA Research and Bankinter's Analysis Department predict that they will rise by around five percent annually
The financial site HelpMyCash has analysed all the scenarios and advised people that given the looming uncertainty, waiting too long to apply for a mortgage loan could be counterproductive. But, it has emphasised that the future is unpredictable so buyers should decide what is best for them.
It's also worth noting that waiting to apply for a mortgage when the rates lower, could also mean that property prices have increased making it a similar risk, and meaning that borrowers still won't be in a better position.
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