ECB raises rates to 2.5%: what it means for your mortgage and for buying on the Costa del Sol

The ECB's rate hike to 2.5%, effective from 16 September 2026, makes variable-rate mortgages roughly €70 a month more expensive at each review and pushes new mortgage rates towards 3%. It is the second increase since June and arrives with 12-month Euribor at 3.10%, its highest level since August 2024. For anyone buying on the Costa del Sol it does not change the fundamentals of the market, but it does change the monthly maths and the financing strategy.

Why is the ECB raising rates in September 2026?

The reason is inflation. In August, eurozone prices rose 3.3% year on year, the highest reading in three years, driven by energy and geopolitical tension in the Middle East. The central bank itself admits that inflation will stay above its 2% target for a long period, probably until 2029. With that diagnosis, it has chosen to make money a quarter point dearer.

Its official forecasts sketch a slow landing: headline inflation of 3% in 2026, 2.5% in 2027 and 2.1% in 2028, with eurozone GDP growth of 0.9% this year and 1.4% next year. In other words, rates will stay high for longer than many buyers expected at the start of the year.

How much does a variable mortgage payment go up?

Twelve-month Euribor, the benchmark for most variable mortgages in Spain, has climbed to 3.10%. Anyone with an annual review in the coming months will see their payment rise by around €70 a month on an average mortgage. On new loans the average rate is already close to 3%, and industry experts warn that banks will use the ECB's move to revise their offers upwards.

To bring it home to our area, we have taken the September median prices from our Costa del Sol market report and worked out the payment on an 80% mortgage over 25 years at a 3% rate (today's) versus 3.5% (the scenario if banks pass the hike on).

Indicative calculation by EVS PROPERTY GROUP based on median asking prices (September 2026), excluding fees and insurance. Half a point of interest is worth roughly €26 a month per €100,000 borrowed.

Will house prices fall with higher rates?

That is not what the data suggest. In the second quarter Spanish house prices were up 12.2% year on year, and the expected effect of the rate rise is a slower pace, not a decline. The explanation lies in supply: developers also finance their projects with debt, and dearer money means fewer housing starts. Less new-build in a market already short of stock supports prices rather than sinking them.

On the Costa del Sol this effect is more visible than in the rest of Spain. A large share of buyers in Marbella, Estepona or Benahavís are foreigners who pay cash or borrow in their home country, and are therefore less sensitive to Euribor. We covered this in our article on 20 months of double-digit rises: international demand and the shortage of land matter more than the price of money.

Where the blow will be felt is among local buyers stretching their financing to the limit. Some of that demand will shift to renting, adding pressure to rents that were already rising strongly. For residential buy-to-let investors, that means more demand from solvent tenants.

Will there be more rate hikes in 2026?

Experts are split. One camp expects up to two more hikes, to 3%, if energy tension persists. Another argues that this inflation is supply-driven, mainly energy, and that dearer credit punishes households without fixing the cause. The banking consensus, led by Bankinter, expects the ECB to hold rates at its October and December meetings. Our reading: do not count on cuts before 2027, and set up your mortgage for a scenario of stable or slightly higher rates.

What should you do if you are buying a home now?

• Compare fixed, mixed and variable mortgages at today's rate. Mixed mortgages already account for 15% of signings and suit anyone who wants a fixed payment in the early years; we explain it in our article on mixed mortgages in 2026.
• Ask for the binding offer before 16 September if your deal is already advanced: signed conditions hold even if the bank raises its rates afterwards.
• Run the payment at a rate half a point above the one you are offered. If it still fits your budget, the purchase is sound.
• If you are buying from outside Spain, consider financing at home or combining savings with a smaller Spanish mortgage: every €100,000 less borrowed saves around €470 a month.
• Negotiate the price with data. Resale sellers in Mijas, Fuengirola or Benalmádena know financing has become dearer, and there is more room than a year ago.

Conclusion

The ECB's hike to 2.5% makes the payment dearer, not the home. On the Costa del Sol, with international demand and little new-build, prices are moderating but not retreating, and anyone who finances well can still buy on good terms. At EVS PROPERTY GROUP we help you choose the area, negotiate the price and coordinate financing with banks that work with Spanish and foreign buyers. Get in touch and we will review your case.

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