30 October 2025 | By John Busby
Oct 25 European Mortgage market update
ECB stable and Swiss rates held at zero
Traverse Market Update — October 2025
Euro borrowing costs steady at cycle lows as investors move early to lock in funding
With euro borrowing costs holding near record lows, international buyers are moving quickly to secure finance before the window narrows. Private clients and family offices are taking advantage of favourable conditions to refinance, restructure or establish credit lines ahead of potential shifts in 2026.
Margins across southern Europe remain tight, and the spread between euro and sterling borrowing is once again meaningful. For many UK-based clients, euro debt has become a strategic asset — offering both diversification and cheaper liquidity.
“Clients are acting now, while liquidity remains cheap,” said John Busby, Head of Sales at Traverse International Finance. “They see the divergence between euro and sterling rates as a strategic advantage that won’t last indefinitely.”
ECB holds again as inflation nears target
The European Central Bank left rates unchanged at its October meeting, keeping the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending facility at 2.40%.
After eight cuts since mid-2024, this marks the second consecutive hold. President Christine Lagarde described the outlook as “data-dependent,” noting that borrowing conditions are now broadly consistent with price stability. Most analysts expect the ECB to stay on hold into early 2026.
Private banks across the eurozone remain competitive, offering rates around 3.25% variable to 3.5% fixed. Retail banks in Spain and Portugal lead the market with sub-3% pricing for prime borrowers, while Italian banks follow slightly higher. French retail banks are becoming more expensive, with most fixed rates now starting at 4%.
Swiss rates unchanged
Switzerland continues to offer the lowest nominal rates in Europe, where the Swiss National Bank has held its policy rate at 0.00% since June. Inflation remains within target, and policymakers have ruled out a return to negative rates. Markets expect continued stability through 2026.
Indicative European mortgage rates
(Typical terms for UK- and US-based non-resident borrowers, 60–70% LTV)
| Market Indicator | Local 20-year fix | Private Bank Rates |
|---|---|---|
| 3-month Euribor: 2.00% | France: ~3.9% | 3-year fix: ~3.3% |
| 5-year swap: ~2.10% | Italy: ~3.6% | 5-year fix: ~3.2% |
| 15-year swap: ~2.65% | Spain: ~2.8% | 20-year fix: ~3.9% |
| Average margin: ~1.25% | Portugal: ~2.9% | Euro variable: ~3.2% |
| Swiss base rate: 0.00% | Switzerland: ~1.4% | CHF variable: ~1.1% |
Private-bank loans often require assets under management equal to 30–50 per cent of the loan principal.
Case study — financing for purchase and renovation
The story opens
A Hong Kong-based buyer purchasing on the Riviera required a rapid turnaround on finance for a property where the sales contract did not include a mortgage clause. The funds had to be available on completion day, or the buyer’s deposit would have been at risk.
Traverse closes
Traverse arranged a 100 per cent loan to complete the purchase, using a seven-year, interest-only mortgage fixed at 3.4%. The client placed close to 50 per cent of the loan amount with the bank as assets under management. Although the valuation and account setup were completed promptly, the bank slowed in the final stage. Traverse negotiated a two-week extension to ensure successful completion.
Comment
“We’re seeing clients act strategically — securing lines of credit now while rates remain near cycle lows,” Busby said. “Interest in European property remains high as the UK market continues to labour.”
For a deeper look at how investors are borrowing at current levels to preserve liquidity — or using low-cost euro debt to invest in assets yielding more than their borrowing cost — see our feature: Locking in Low-Cost Borrowing to Keep Powder Dry for Investments.
This update is for informational purposes only and does not constitute financial, legal or investment advice. Rates and market conditions are indicative and subject to change. Readers should seek professional guidance before acting on this information.