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Economy

Eurozone inflation rises to 3.8%, increasing mortgage costs

Eurozone inflation hits 3.8% and average German ten-year mortgage nears 4.5%. ECB's deposit rate stands at 2.5% after two hikes this year.

Álvaro Sáez Ferrer
Álvaro Sáez Ferrer
· 2 min read
AIIllustrative image: model of a wooden house on euro coins, in close-up and natural light
Illustrative image: model of a wooden house on euro coins, in close-up and natural light

Eurozone inflation rises to 3.8% and the German ten-year mortgage is approaching 4.5%, its highest level since 2009.

According to moncloa.com, eurozone inflation has risen to 3.8% and the European Central Bank (ECB) faces its meeting on 29 October with no room to lower interest rates. The same figure reaches the German mortgage market, where the average ten-year rate is nearing 4.5%, according to mortgage consultancy Interhyp.

This level is the highest since 2009 and surpasses the previous peak of around 4.4% at the end of 2023. Records from the Bundesbank and the ECB itself confirm that financing costs have not been at these levels since the financial crisis.

The average rate for German mortgages rose from 1.48% at the beginning of 2022 to 4.15% at the end of 2023. It dropped to 3.57% at the beginning of 2025 and rose again to 3.91% in the second quarter of this year. Since May, when it was signed at 3.9%, it has continued to rise.

The ECB has raised rates twice this year, leaving the deposit rate at 2.5%. According to Interhyp's calculations, the latest increase adds about 200 euros to the monthly payment of an average mortgage. Jörg Utecht, CEO of Interhyp, believes that rates will only decrease significantly when the conflict with Iran is resolved, and he sees few signs that this will happen soon.

According to ING's analysis, housing in Germany increased by 0.6% year-on-year in the second quarter, according to Destatis. The granting of new mortgages fell by more than 1.5% between January and July.

In Spain, most active mortgages are variable rate linked to the Euribor for twelve months, which follows the ECB's deposit rate. The increase is passed on to the payment at each annual review.

Germany is also one of the main countries of origin for foreign homebuyers in Spain, with Balearic Islands, Costa Blanca, and Canary Islands as usual destinations. A more expensive loan in the German market reduces the budget with which these buyers arrive in Spain. Spanish SMEs selling to German clients in sectors such as automotive, capital goods, or chemicals may also see their clients postpone investments as money becomes more expensive.

Álvaro Sáez Ferrer

Written by

Álvaro Sáez Ferrer

Redactor

Economista por ICADE y una de las pocas personas que disfruta leyendo la ley de presupuestos. Cafetero, padre a tiempo completo y azote de la letra pequeña; en Diario Empresas escribe de economía y fiscalidad.

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