How Euribor and Interest Rates Affect the Real Estate Market
Have you thought about how Euribor fluctuations affect your home loan or real estate investments? Interest rate changes directly shape loan payments, purchasing power, and ultimately the entire Estonian real estate market.
Euribor's current status and forecasts
In October 2025, the 6-month Euribor is 2.103% and the 12-month Euribor is 2.021%. Although earlier forecasts predicted a decline of the 6-month Euribor to the 2% level by mid-2025, October data shows instead a modest increase.
Euribor is primarily determined by three factors:
Inflation (2.1% in the eurozone in 2025)
Economic growth (1.1% in the eurozone in 2025)
ECB interest rate policy (rate cuts through June 2025)
How do Euribor changes affect home loans?
Euribor changes are directly reflected in home loan monthly payments. According to analyses, a 1 percentage point decrease in Euribor reduces the monthly payment of an average residential loan by approximately 50-60 euros. Over a year, this already means savings of 600-720 euros.
For example, with a 100,000 euro loan over 30 years, a Euribor decline from 3% to 2% would mean the monthly payment would decrease from approximately 425 euros to 370 euros, providing savings of about 55 euros per month. Over the entire loan period, savings could reach approximately 19,800 euros.
Estonian real estate market outlook 2025+
The Estonian economy shows modest growth in 2025 – projected economic growth is approximately 0.6% and inflation approximately 5.3%. These figures are still higher than the eurozone average, which may suggest that the real estate market will also continue on a slight growth trend.
Analysis of Estonian apartment prices shows that prices have shown stable growth in recent years, particularly in Tallinn, where in September 2025 the average price per square meter was 3,760 euros, which has increased 7.4% compared to a year ago. Market analysts predict that prices will continue to rise, particularly in Tallinn and Tartu, where price increases of up to 8% per year are expected.
Scenarios for Euribor and interest rate changes
Euribor rise
If Euribor rises higher than forecast, for example to the 3% level, this would bring about:
An increase in loan payments, which reduces buyers' purchasing power
A slowdown in the issuance of new loans
Stabilization or even a decline in real estate prices
Livening up of the rental market, as home purchasing becomes less affordable
Euribor decline
If Euribor falls to 1.5% or below:
Loan payments decrease, which increases buyers' purchasing power
The issuance of new loans accelerates
Real estate prices may rise, particularly in popular areas such as Tallinn city center, Kristiine and Lasnamäe
Real estate investment becomes more attractive
Euribor stability
If Euribor remains relatively stable in 2025 in the 2-2.5% range:
The market continues its current growth trend
Prices rise moderately, but sharp jumps are unlikely
Borrowing remains active, particularly among first-time homebuyers
How do changes affect different regions in Estonia?
Euribor and interest rate changes affect Estonian regions differently. Analysis of the real estate market showed that the average price per square meter for apartments in Tallinn was 3,760 euros in September 2025, which represents an annual increase of approximately 7.4%
Interest rate changes most affect higher-priced areas such as Tallinn and Tartu city centers, where loan amounts are larger. In rural areas, where real estate is cheaper in absolute terms, interest rate changes are not reflected in monthly payments as strongly in euros, but when compared to people's incomes, the impact can still be noticeable.
Kinnisvara24 to help with your real estate decisions
Kinnisvara24 offers various tools and services to help you make informed real estate decisions:
Comprehensive real estate market statistics – Estonia's most comprehensive statistics environment, which is free and accessible to everyone.
Unique offerings – on our portal you will find real estate listings that are not available on other portals.
User-friendly search system – allows you to find real estate that exactly meets your needs, whether it's a house or an apartment.
Educational articles – in our blog you will find helpful advice, such as how to write a good real estate listing or how to set the right selling price for your apartment.
Follow our real estate market reviews regularly to make informed decisions. Interest rates and market conditions may change, but good preparation helps find the best opportunities at any time.
