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What is mortgage spread?

Mortgage spread refers to the profit the bank obtains by lending you the money when you have a variable-rate or mixed mortgage. Let's explain exactly what we mean by that.

The first thing you need to know is what the “spread” is applied to. In the vast majority of mortgages, this spread is added to the Euribor, an official index of the interest rate that banks in the euro area pay to lend money to each other. You might say it's the “price of money”.

When you compare offers from different banks, you should always look at the interest rate spread they apply, i.e. the fixed percentage they add to the Euribor, because the sum of the Euribor and the spread will be the price of your mortgage – in other words, what's known as the nominal interest rate (NIR).


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