Home loans below five percent, buyers return

On June 10, the most competitive home loans on the market carried a nominal interest rate of 4.55 percent and an annual percentage rate of 4.78 percent, the first clear move below the five percent threshold after a prolonged stretch above it. The story is no longer only the price per square meter: the price of money has moved to center stage, and it is what decides whether a credit buyer commits to a loan running two or three decades.

The average rate on newly approved home loans now sits at around 4.5 percent, a level that brings back a share of buyers who spent the past two years waiting out the high cost of borrowing. The drop reflects two factors: a low Euribor base, to which the variable portion of the rate is tied, and a legal cap that limits how much banks may charge.

Why does the price of money matter more than the price per square meter?

For a buyer paying out of pocket, the price per square meter is the only number that counts. For a credit buyer, who makes up the bulk of demand, the decisive figure is the ratio of the monthly payment to income, and here the interest rate does work that the price of the apartment cannot offset. A difference of one percentage point on the variable rate, over a 20-year loan, shifts the total interest repaid to the bank by tens of thousands of euros.

The dominant product on the market is a combined rate: fixed for the first 3 to 10 years, then variable, tied to Euribor plus the bank’s margin. That model gives the buyer a predictable payment in the early, most sensitive years of repayment, while leaving the bank room to track the reference rate later. The down payment is usually around 20 percent of the property value, which remains the main entry barrier for younger buyers without savings or family support.

How much does the legal cap protect?

The key change from the earlier period is the legal ceiling on the variable rate. For 2026 to 2027 that ceiling is tied to the weighted average market rate, increased by one fifth. The mechanism effectively sets an upper bound above which a bank cannot push the variable portion, so a buyer who signs a contract today is protected against a sudden jump in the payment if Euribor climbs again in the meantime.

That matters because a combined rate does not remove the risk of rising rates, it postpones it to the period after the fixed term ends. The cap does not guarantee that the payment will not rise, but it limits the speed and size of that rise, which for an average household is the difference between a manageable and an unsustainable burden. Banks still compete on margin and on the size of the down payment, so the best offer differs from the average by nearly half a percentage point.

The practical takeaway for a buyer is that the math has shifted in their favor, but neither the cap nor the low Euribor base is a permanent fixture. Anyone who calculates the payment only on the fixed portion, and not on the scenario after the fixed term ends, is looking at only half the contract. Would you rather lock in a fixed rate for a longer term today, or take the risk that Euribor stays low?