Mortgages in Spain Experience 10% Drop and Highest Interest Rates in Nearly 10 Years at Start of Year

The Spanish Mortgage Industry Faces New Challenges as Interest Rates and Housing Prices Shift

In January 2024, Spain’s mortgage firm experienced a 10% drop compared to the same month in 2023, with 33,128 loans recorded. Despite this decline, it is the least pronounced drop among the past 12 consecutive months of negative rates. The average interest rate for home mortgages in Spain was at its highest since December 2014 at 3.46%.

The capital lent decreased by 12.7%, while the average amount of mortgages on homes decreased by 2.7% year-on-year to €138,149 euros. About 42% of mortgages were at a variable rate and 58.2% at a fixed rate. The average interest rate for variable rate mortgages was at its highest since June 2015 at 3.24%, while the fixed rate mortgage interest rates remained relatively stable at around €3.64%.

In terms of monthly changes, both home mortgages and capital loans increased by close to 33% in January compared to December 2023. The overall trend in mortgage financing indicates a moderation as stated by Beatriz Toribio, the general secretary of the Association of Builders Promoters of Spain. It is predicted that this trend will continue in the coming months as experts anticipate that interest rates will fall further due to lower inflation rates and higher economic growth.

The autonomous communities with the most mortgages on homes in January were Madrid, Andalusia, and Catalonia, with some regions experiencing a decrease in home mortgages compared to the previous year. Changes in mortgage conditions have also decreased significantly over time with notable growth in entity changes.

Overall, despite declining housing prices and increased competition among financial institutions, experts expect changes in the mortgage market as interest rates fall further and more favorable conditions emerge for borrowers.

In conclusion, while there has been a significant decline in new mortgage loan activity in Spain’s mortgage industry compared to previous years, this trend is expected to continue due to falling interest rates and increasing economic growth. Additionally, changes in mortgage conditions have decreased over time with notable growth in entity changes.

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