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Mortgage rates12 August 2026 · 11 min read
Raffy NikoghosyanAgent, BulGhar Homes
Rate cycle · June to August 2026
Frankfurt raised rates, and the Bulgarian mortgage got cheaper.
The ECB raised rates for the first time in three years. The same month, the average rate on a new housing loan in Bulgaria fell to a record 2.41%. The two news items sound contradictory. They are not.
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Timeline
What happened.
11 June 2026
The ECB raises its three key interest rates by 0.25 percentage points, the deposit rate from 2.00% to 2.25%, effective 17 June. The first increase in almost three years; the last was in September 2023, at a peak of 4.0%. The reason: inflationary pressure from more expensive energy due to the conflict in the Middle East.
23 July 2026
The ECB keeps rates unchanged.
10 September 2026
Next meeting. Over 65% of banks in the eurozone expect another increase of 0.25 percentage points, to 2.5%.
“What lies ahead for mortgages?!”
For context: the eurozone contracted by 0.2% in the first quarter of 2026. The ECB is raising rates in a shrinking economy, not an overheating one.
The same month, in Bulgaria
The turn in Bulgaria.
0%
average rate on new housing loans · June 2026 · Bulgarian National Bank (БНБ)
FELLwhile the ECB was raising rates in Frankfurt, the mortgage rate in Bulgaria fell to a record low. Annual percentage rate (ГПР) 2.75%.
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According to ECB data, Bulgaria has the second lowest mortgage rate in the entire eurozone: 2.45% against an average of 3.43%. Only Malta is lower, at 2.08%.
Loan of €200,000 over 20 years · Malta
€1,019 per month
Loan of €200,000 over 20 years · Latvia
€1,231 per month
Over the full term of the loan, Latvia pays nearly €50,000 more than Malta. Bulgaria, with a rate between the two extremes of the eurozone, stands much closer to Malta.
Rate on new mortgage loans · 2026
Where we stand against the others.
Malta −0.37 pp below Bulgaria2.08%
Bulgaria2.45%
Second lowest rate in the eurozone
Spain +0.35 pp above Bulgaria2.80%
Portugal +0.40 pp above Bulgaria2.85%
Croatia +0.50 pp above Bulgaria2.95%
Slovenia +0.54 pp above Bulgaria2.99%
France +1.05 pp above Bulgariaabout 3.50%
Germany +1.39 pp above Bulgaria3.84%
Lithuania +1.43 pp above Bulgaria3.88%
Estonia +1.60 pp above Bulgaria4.05%
Latvia +1.73 pp above Bulgaria4.18%
Eurozone average3.43%
For a loan of €200,000 over 20 years, Latvia pays nearly €50,000 more than Malta over the full term. Bulgaria is close to the cheapest end.
Why the ECB does not move your payment
Frankfurt does not move your payment.
Bulgarian banks price loans on a local index derived from deposit rates in Bulgaria, not on ECB decisions and not on EURIBOR.
€56.4 bn
household deposits
against
€31.5 bn
loans · BNB, June 2026
Banks have almost twice as much money as they lend out. Money is cheap in Bulgaria because there is a surplus of it.
“Its value is considerably lower and does not have such large fluctuations, because we continue to see very high liquidity and no grounds to believe that rates will increase.”
DSK Bank
“Variable interest rates in Bulgaria are for the most part linked to the cost of the funds raised, that is, to deposit rates.”
Lyubomir Levicharov, Association of Banks in Bulgaria
The channel through which the ECB effect will still reach mortgages is slow: deposit rates have already started to rise, to 1.57% on average in June, 0.24 percentage points more in a month. It reaches payments with a long delay, over months and years, not days. In the Baltic states it is the opposite: there, floating rates are tied directly to ECB indices. In Bulgaria over 90% of mortgages are floating, but on a deposit index, not a European one.
A lesson from history
The euro does not raise rates automatically.
Croatia · in the eurozone since 2023
2.95%
Today, below the eurozone average. Joining the euro did not raise rates.
Lithuania · eurozone since 2015
3.88%
Rates there were pushed up by the concentration of Scandinavian banks, not by the euro.
Latvia · eurozone since 2014
4.18%
The same model: Scandinavian banks, limited competition, a higher cost of credit.
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The rate is not set by the euro. It is set by bank competition in your country.
The credit boom continues
No cooling after June.
€0 bn
Housing loans in total, +26.4% year on year
€0 m
New business in June, +28.4% month on month
€0 k
Average new mortgage loan. €180k in Sofia, €113k outside it
0%
Deals in Q2, while lending grows
Average term of new mortgages: about 26 years, according to DSK Bank. Deals are falling, lending is growing. The market is normalising, not collapsing.
For your wallet
The concrete calculation.
Monthly payment over 25 years
Loan of €200,000 over 25 years, rate from 2% to 4%
€848
→
€1,056
+24.5%
A double rate does not mean a double payment.
The honest section
Practical rules.
BNB, lending rules
Payment up to 50% of income. Financing up to 85% of the property value. Term up to 30 years.
Buffer and budget
Keep a reserve of 3 to 6 payments. Your budget should withstand a payment at a rate 2 percentage points higher.
If the rate goes up
Renegotiation, fixing, extending the term or refinancing. Compare the annual percentage rate, not just the interest rate.
A fixed rate is rarely offered in Bulgaria, usually for 1 to 5 years, and it is 0.8 to 1.0 percentage points more expensive than a floating one.
Cheap money makes some buyers reach for homes beyond their means, warns Assoc. Prof. Nozharov of the University of National and World Economy (УНСС). Forecasts for Bulgarian rates in 2026 remain in the range of 2.5 to 3.5%.
Assoc. Prof. Nozharov, UNWE
DSK Bank forecasts a slowdown in property price growth to about 8.5% in 2026, but not a decline.
