Fixed vs. variable mortgages in 2026: when each one pays off

The 2026 context: the Euríbor rises again

The ECB cut rates several times between 2024 and 2025, and the 12-month Euríbor (the reference rate for most Spanish variable mortgages) averaged around 2.2% in 2025, compared with the 4% highs of 2023. But the trend reversed in 2026: the Euríbor is now around 2.8%, reflecting inflation that has also ticked back up above the ECB's target. Banks have adjusted their fixed-rate offers accordingly, though competitive options with bundled-product discounts still exist.

The question thousands of families are asking themselves: fixed or variable?

The honest answer is that it depends on your time horizon, your risk tolerance, and the specific bank's conditions. Let's break down each factor.

Variable mortgages: how they really work

A variable-rate mortgage in Spain is normally tied to the 12-month Euríbor, and is expressed as:

Payment rate = Euríbor + spread (diferencial)

If the Euríbor is at 2.5% and the spread is 0.70%, you pay a 3.20% nominal rate.

The review happens annually or every six months, depending on your contract. If you signed before 2022, your mortgage was reviewed when the Euríbor was negative. If you signed in 2023, the following year's review was a brutal shock.

When a variable rate makes sense

• When the Euríbor is high and expected to fall (as is the case now)
• If you have a low spread (below 0.60%)
• If you can handle payment increases without financial strain
• If you're able to make early repayments when the Euríbor rises

The risk many people ignore

With the Euríbor at 0% in 2021, many people bought assuming payments of €700/month. When it rose to 4%, those payments became €1,050. A family that stretched their budget to the limit found themselves in serious trouble.

Variable rates aren't bad, but you need a cushion. General rule: if a 2-point rise in the Euríbor would push your payment above 35%–40% of your income, a fixed rate is safer.

Fixed mortgages: certainty has a price

A fixed rate guarantees the same payment for the entire life of the loan. In 2022–2023, fixed rates shot up to 3.5%–4.5% APR (TAE). They fell in 2024–2025 to more attractive levels, and in 2026 they've stabilized in line with the Euríbor's rebound.

What the ads don't tell you

The rate you see advertised is the TIN (nominal interest rate). What you actually pay is the TAE (annual percentage rate/APR), which includes origination fees, bundled products, and mandatory insurance.

A real example:

• Advertised TIN: 2.70% fixed
• Mandatory home insurance with the bank: +0.20%
• Mandatory life insurance: +0.35%
• Amortized origination fee: +0.15%
• Real TAE: ~3.40%

Compare that with another bank offering a 3.10% TIN with no mandatory bundled products and a real TAE of 3.15%. The second looks more expensive by TIN, but is cheaper in total cost.

Bundled-product discounts: the game that's hardest to understand

Banks offer rate discounts in exchange for taking out other products:

The most common mistake: accepting all the bundled products without calculating whether the discount is actually worth it.

Example: taking out life insurance with the bank at €500/year instead of €200 to get a 0.15% discount on €150,000 = €225 in interest savings. You lose €75 a year.

How to calculate it correctly

1. Work out the annual interest savings each discount generates (% × outstanding principal)

2. Compare it with the real extra cost of the bundled product

3. If the extra cost exceeds the savings, don't take it out

Remember: in the second half of the loan, the outstanding principal is much lower, so the discount is worth less in absolute euros.

Early-repayment compensation clause

If you have a fixed-rate mortgage and want to pay it off early or switch banks, the bank can charge you compensation. The 2019 Mortgage Law caps it at:

• The first 10 years: maximum 2% of the amount repaid
• After 10 years: maximum 1.5%

For variable mortgages the cap is much lower: 0.25% in the first three years and 0% after that.

This matters a lot if you plan to make aggressive extra repayments or sell the property within the next 5–7 years.

Mixed mortgages: the best of both worlds?

Mixed mortgages start with a fixed period (5, 7, or 10 years) and then switch to variable. They make sense if:

• The initial fixed rate is significantly lower than a 25–30 year fixed rate
• You believe the Euríbor will stay stable or fall by the time you switch to variable
• You plan to make aggressive early repayments in the first years

The risk: if the Euríbor rises when you switch to variable, you could end up paying more than with a pure fixed rate.

The mortgage deduction in Euskadi: a differentiating factor

If you're a tax resident in the Basque Country, the regional (foral) IRPF deduction changes the analysis:

• Under 35: 23% deduction on payments made (max €8,500/person/year)
• 35 or over: 18% on payments made (same limit)
• Lifetime limit on the loan: €36,000 per person in total

If your annual payment is €9,600 and you're under 35, 23% of €8,500 = €1,955 in tax savings a year.

Use the mortgage calculator to see the exact impact, including whether it's worth making early repayments to maximize the deduction.

The decision in five questions

1. How much would a 2-point rise in the Euríbor affect me?

If your payment would exceed 40% of your income → choose fixed.

2. How long will I keep the mortgage?

Less than 10 years → variable usually pays off. More than 20 → fixed gives more certainty.

3. Have I calculated the real TAE including all bundled products?

Never compare using the TIN alone. Always calculate the total annual cost of each full offer.

4. Do I still have deductions to take advantage of in Euskadi?

If so, the tax savings can tip the balance.

5. Do I have a 3–6 month payment cushion?

Without that cushion, any rate increase can become a serious problem.

Simulate different scenarios in the mortgage calculator, where you can compare fixed vs. variable payments, see the full amortization schedule, and calculate the regional deduction if you live in Euskadi.