Two recent headlines look incompatible. On 11 June 2026 the European Central Bank raised its key interest rates by 0.25 percentage points — its first increase since September 2023. Six weeks later, on 27 July, the Bulgarian National Bank published its June interest rate statistics: the average rate on new housing loans in Bulgaria fell to 2.41%.
How can eurozone rates rise while mortgages in Bulgaria — now part of that same eurozone — get cheaper? The answer lies in how these loans are priced, not in a statistical error. This article updates our mortgage guide with data published after it.
The Governing Council raised all three key rates by 25 basis points, effective 17 June 2026:
The deposit facility had stood at 2.00% since June 2025. The reason for the turn was renewed inflationary pressure in spring 2026, driven mainly by energy costs. At its following meeting on 23 July 2026 the Governing Council left rates unchanged.
The BNB release of 27 July 2026 points the other way for housing lending:
In short: in the very month the ECB tightened, Bulgarian banks lent more for housing, at a slightly lower price.
Three reasons, each worth understanding before drawing conclusions about what comes next.
First, the index. Floating mortgage rates in Bulgaria are built as a margin over a reference index derived from deposit rates, not over EURIBOR or €STR. On joining the eurozone the large banks did not switch to EURIBOR; they moved the base of their index from lev deposits to euro deposits. An ECB decision changes what money costs banks in the interbank market — it does not automatically change what a bank pays its own depositors.
Second, liquidity. The Bulgarian banking system remains highly liquid. Banks hold ample deposit funding and are not forced to raise money aggressively elsewhere. As long as that holds, competition between them pushes rates down regardless of the ECB's direction.
Third, the bigger change happened earlier. Since 1 January 2026 the BNB has stopped publishing its base interest rate (ОЛП) and the LEONIA Plus index. Contracts that referenced them are now priced off a new base. For your actual monthly payment, that switch matters far more than the ECB's 25 basis points.
No direct pass-through is not the same as immunity. The channel exists, it is simply slower: costlier refinancing across the eurozone gradually intensifies competition for deposits, deposit rates rise, and the index your margin sits on rises with them. The lag between an ECB decision and its effect on your instalment is measured in quarters, not days.
That makes the June figures a snapshot of the present, not a forecast. The ECB's next monetary policy meeting is on 10 September 2026.
To see how the instalment moves across different amounts and terms, our mortgage calculator gives a quick orientation.
The figures here are as of August 2026 and are indicative — your actual rate depends on your profile, your bank and the moment.
Planning a purchase with a mortgage, or wondering whether to refinance? Call us or visit our office — we will go through your terms together and work out calmly what makes sense.
