Mortgage interest rate 2026: Euribor, margin and loan cap

What makes up a mortgage interest rate?

In Finland most housing loans have a variable rate. The loan interest rate consists of two parts: the reference rate, which is usually one of the Euribor rates, and the margin agreed with the bank. The reference rate changes with the markets, but the margin stays the same for the whole loan term unless it is renegotiated.

The reference rate is reset at agreed intervals, for example every 3, 6 or 12 months. On the reset date the loan's interest rate becomes the then-current reference rate plus the margin, and the monthly instalment changes accordingly. A short reset interval reacts quickly to interest rate changes in both directions, a long one more slowly.

Average interest rate on new mortgages, autumn 2026

According to the Bank of Finland, the average interest rate on new housing loans was 3,35 % in August 2026, compared with 3,28 % in July. In July 2025 the corresponding average rate was 2,74 %, so interest rates on new loans have risen over the year. The figures were published on 28.8.2026 and 28.9.2026.

In August 2026 households took out €1.1 billion of new home loans. The home loan stock at the end of August was €105.4 billion, of which investment-property loans were €9.2 billion.

The average interest rate is the average of all new loans, so your own offer may differ from it. It is affected by, for example, the chosen reference rate, the margin and any interest rate hedging.

Euribor and the ECB key interest rates

Euribor rates reflect expectations about the monetary policy of the European Central Bank. The ECB raised its key interest rates by 0,25 percentage points from 16.9.2026: the deposit rate is 2,50 %, the main refinancing operations rate 2,65 % and the marginal lending facility rate 2,90 %. Rates were left unchanged at the July 2026 meeting.

At the beginning of October 2026, Euribor rates were at approximately the following level (8.10.2026):

3-month Euribor: 2,642 %
6-month Euribor: 2.936%
12-month Euribor: 3,213 %

Margin: a small number, a big impact

The margin is the part of the interest rate priced by the bank. It is affected by, among other things, income, collateral, savings, loan term and the extent of the customer relationship. Because the margin applies for the whole loan term, even a difference of a tenth of a percentage point is clearly visible in the total interest paid over decades.

Compare offers with the same loan amount, loan term and reference rate. In addition to the margin, look at the loan's opening fees, account management fees and the real annual interest rate, which combines all costs into one figure.

The choice of reference rate also matters. At the beginning of October 2026, the 12-month Euribor was clearly higher than the 3-month Euribor, which indicates that markets expect interest rates to stay elevated. With a short reference rate, a change in interest shows up in the monthly instalment faster; with a long reference rate, the instalment stays the same for longer. Neither is automatically cheaper; the outcome depends on how rates develop in the future.

Loan-to-value cap and loan term 2026

The loan-to-value cap, or maximum loan-to-value ratio, limits how large a share of a home's value can be borrowed against collateral. On 29.6.2026 the Financial Supervisory Authority (FIN-FSA) decided to raise the loan cap for loans other than first-home loans from 90 per cent to 95 per cent from 1.7.2026. The cap for first-home buyers is 95 %. In practice, your own funding share or additional collateral must therefore cover at least 5 % of the purchase price.

The easing is temporary. On 30.9.2026 the Financial Supervisory Authority (FIN-FSA) decided to keep it in force and assesses the situation quarterly. The loan cap can be restored to the baseline level when there are no longer grounds for the deviation.

The legislative changes that entered into force at the start of June 2026 extended the maximum term of a new home loan from 30 years to 40 years. According to the Bank of Finland, in July 2026 the average repayment period of new owner-occupied home loans was 25 years and 3 months, and loans of over 30 years accounted for over 16%.

Interest rate caps and other interest protection

Interest rate protection limits the effect of a rate rise. The most common forms are an interest rate cap, where an upper limit is agreed for the reference rate for a set period, and a fixed rate, where the whole rate is locked in for an agreed period. Protection is usually paid for separately or through a higher interest rate.

The price and terms of hedging vary by bank and market situation. Because the ECB raised its key interest rates in autumn 2026, the price of hedging may have changed quickly, so request a quote from several banks on the same day. Check from when the hedge starts, how long it is valid, what early termination costs and whether your loan benefits from a rate cut during the hedge. The decision depends on your own ability to pay, so it is worth discussing with the bank and calculating several interest rate scenarios.

Frequently asked questions

What is the average interest rate on a home loan now?

According to the Bank of Finland, the average interest rate on new housing loans was 3,35 % in August 2026. The figure is updated monthly in the Bank of Finland's monetary financial institution statistics.

How much of your own money is needed for a mortgage in 2026?

From 1.7.2026 the loan-to-value cap is 95 % for all buyers, so your own funding or additional collateral is needed for at least 5 % of the purchase price. The bank may still require more.

Does the margin change if the Euribor rises?

No. The margin is agreed in the loan agreement, and a change in Euribor affects only the reference rate. You can try to renegotiate the margin, for example by putting the loan out to competitive tender.

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Sources

The article is general information and does not replace the guidance of an authority, a lawyer or an adviser. Check up-to-date information from the sources.