As the effects of U.S. President Donald Trump's increasing trade tariffs ripple across the globe, Spain finds itself at a crossroads in its housing market. The tariffs, which target European Union products with a new 20 percent levy, are causing significant uncertainty in Spain's mortgage sector and have sparked widespread protests against the country's housing crisis.
Trump's tariffs, framed by the president as a "Declaration of Economic Independence," aim to revitalize U.S. domestic manufacturing. However, this move has raised concerns among European Union countries, especially Spain, where the implications are already being felt. According to Trump, "For decades, our country has been ripped off. We've been ripped off for 50 years, but that's not going to happen again." This rhetoric has led to fears of a potential global trade war, which could exacerbate economic challenges not just in the U.S. but also in Europe.
The European Central Bank (ECB) has been proactive in addressing the situation, having lowered the prices of bank loans, particularly mortgages, since June 2024. However, this trend may soon come to an end as the ECB warns of rising Consumer Price Index (CPI) risks that could influence its monetary policy. Reports from the Bank of Spain indicate that the average interest rate on home loans has dropped from 3.49 percent in June 2024 to 2.96 percent in January 2025, but the current economic climate is forcing banks to maintain mortgage prices until the outlook becomes clearer.
The Euribor, the benchmark for setting lending rates, has slowed its rate of decline this year, causing banks in Spain to adopt a cautious approach. The ECB has not ruled out maintaining interest rates at 2.5 percent throughout 2025, although market consensus suggests a potential reduction to two percent. This uncertainty comes at a time when borrowing is up by 27 percent compared to the same period last year, indicating a robust demand despite the looming tariff impacts.
Meanwhile, housing prices in Spain continue to rise, with the General Council of Notaries reporting a 6.9 percent increase in property costs in 2024 compared to the previous year. By 2025, institutions such as BBVA Research and Bankinter's Analysis Department predict a further rise of around five percent annually. This scenario is creating a challenging environment for prospective homeowners, particularly as many are considering whether to apply for mortgages now or wait for potential rate drops.
Adding to the complexities, recent protests in Malaga and across Spain have highlighted the urgent need for reform in the housing sector. Up to 30,000 people demonstrated in Malaga alone over the weekend of April 5-6, 2025, joining hundreds of thousands nationwide under the slogan 'Let's End the Housing Business.' The protests aimed to address soaring rents, a lack of affordable housing, and the prioritization of local needs over tourism-driven policies.
Demonstrators in 40 cities, including Sevilla, Valencia, and Palma, voiced their frustrations as average rents in Spain have doubled over the past decade, while property prices have surged by 44%, far outpacing wage growth. A report from Spain's central bank revealed that nearly 40% of families are spending over 40% of their income on housing costs. Public housing accounts for less than 2% of Spain's total housing stock, significantly below the OECD average of 7%.
Protesters like Manuel Gomez, who moved to Malaga a decade ago, expressed their dismay at the skyrocketing rental prices. He recalled paying €200 for a room back then, while current rates hover around €500-600, with he and his partner now paying €850 together. Gomez lamented, "In the past five years, there’s been an increase of around 45% of the cost of living, and salaries simply haven’t matched."
Kiki Espana, a spokesman for the protest organizers Malaga Para Vivir, highlighted the disparity between the number of people seeking housing and the availability of tourist apartments. "There are 34,466 people registered as seeking property in Malaga, while there are 7,496 tourist apartments with 32,132 beds available. How can this be sustainable?" he asked.
Young people are particularly affected by rising housing costs. Mari Sanchez, a 26-year-old lawyer, shared that she allocates 30 to 40% of her salary to rent, leaving little room for savings or other expenses. Similarly, 22-year-old student Elena Perez noted that her friends are in similar predicaments, struggling to find affordable housing.
The protests have also drawn attention to cases of imminent homelessness due to real estate speculation. In Torremolinos, residents like Yolanda Greta and Jimena Centurion face eviction after their building was auctioned off by Sareb, a bank part-owned by the state, due to unpaid loans. These situations underscore the urgent need for policy changes to protect vulnerable populations from the pressures of a volatile housing market.
As Spain navigates the dual challenges of rising tariffs and a housing crisis, the future remains uncertain. The government's response to these protests and the economic implications of Trump's tariffs will be pivotal in shaping the landscape of housing and finance in the coming years. With many families struggling to make ends meet, the call for change is louder than ever, and the outcome could define a generation.
