Federal Reserve Keeps Rates High Amid Global Disparities
The U.S. Federal Reserve, led by Chair Jerome Powell, has decided to maintain its benchmark interest rate in the range of 4% to 4.5%. This level is more than twice that of the European Central Bank, where rates currently sit between 2% and 2.25%.
Supporters of the Fed’s decision argue that higher rates serve as a necessary check on irresponsible government borrowing. Critics, however, question the longstanding assumption that inflation is best controlled through high interest rates, pointing instead to the importance of supply-side productivity.
Powell’s Independence from Political Pressure
Despite pressure from figures like former President Donald Trump, Powell has remained firm in preserving the Fed’s independence. Economic analysts emphasize that central banks must stay autonomous from executive branches to ensure effective and stable monetary policy. A central bank that merely follows political directives, they argue, undermines the credibility of monetary governance.
The Ongoing Debate Over High Rates
The decision to maintain elevated interest rates is viewed both positively and negatively. On one hand, it discourages excessive issuance of public debt by governments. On the other hand, leading central bankers like Powell and Christine Lagarde continue to adhere to the traditional monetary stance that combating inflation requires raising rates—an approach that is increasingly being questioned by economists.
Mortgage Market Sees Continued Growth Despite Rate Challenges
In a surprising turn, Spain’s mortgage market has shown strong growth despite a generally tight interest rate environment. According to Spain’s National Statistics Institute (INE), the number of mortgages granted on residential properties rose by 14.4% year-over-year in April 2025, reaching 39,176. This marks the highest figure for the month of April since 2010.
Although the annual growth rate slowed compared to March’s 44.5% surge, April represented the tenth consecutive month of mortgage increases. The average interest rate for these loans was 2.98%, nearly flat from March’s 2.97%, and remained below the 3% threshold for the third month in a row.
This follows a February milestone, when the average rate fell below 3% for the first time in nearly two years. As of April, the average mortgage term stood at 25 years.
Loan Amounts and Capital Rise Sharply
The average loan amount increased by 12.4% year-over-year in April, reaching €155,883. Total capital lent grew by 28.5%, totaling €6.1 billion.
Fixed-rate mortgages gained popularity, accounting for 67.1% of all new residential loans—marking the highest share since January 2023. Variable-rate loans comprised the remaining 32.9%. Initial interest rates averaged 2.87% for variable-rate loans and 3.04% for fixed-rate loans.
Monthly and Year-to-Date Trends
On a month-over-month basis, the number of residential mortgages fell by 8.5% in April compared to March, while total capital lent dropped by 9%. The average loan amount also saw a modest monthly decline of 0.5%.
However, looking at the broader picture, the mortgage sector has posted robust gains in 2025 so far. In the first four months of the year, the number of home loans rose by 17.3%. During the same period, the total capital lent jumped by 33.5%, and the average loan amount increased by 13.8%.