The Spanish mortgage landscape is experiencing significant shifts, as revealed by recent data from the National Institute of Statistics (INE). Here’s what you need to know:
1. Declining Mortgage Numbers: For the fifth consecutive time, the number of mortgages on homes in Spain has dropped. This trend began after the European Central Bank (ECB) implemented changes in its monetary policy to combat inflation.
2. June’s Mortgage Figures: In June, we observed a substantial 21.9% decrease in signed home mortgages, with a total of 33,478 mortgage loans granted. While this represents a moderation compared to May’s decline of 25%, it’s still a notable shift in the market.
3. Rising Interest Rates: Interest rates on mortgages continue to climb, reaching 3.19%. They haven’t dipped below 3% for the past three months, marking the highest point since 2017.
4. Fixed vs. Variable-Rate Mortgages: INE data highlights an interesting split in mortgage preferences. Approximately 40% of homebuyers are opting for variable-rate mortgages, while the remaining 60% are choosing fixed-rate mortgages. The average initial interest rate for variable-rate mortgages is 2.84%, compared to 3.45% for fixed-rate mortgages.
5. Why Fixed-Rate Mortgages Are Popular: Given the daily increase in the Euribor, which has surpassed 4%, it’s no surprise that most homebuyers are gravitating towards fixed-rate mortgages. Many families prefer the stability of fixed rates over the uncertainty of potential future increases in monthly payments.
6. Euribor Still a Dominant Reference: The majority of variable-rate mortgages in Spain continue to be linked to the Euribor, both before (81.1%) and after (57.8%) the ECB’s inflation-fighting policy.
7. Regional Mortgage Trends: Regional data paints an interesting picture. Andalusia leads the way with 7,043 mortgages, followed by the Community of Madrid (5,675) and Catalonia (5,336). The Canary Islands is the exception, with a positive annual variation in mortgages (+5.4%). On the flip side, La Rioja (-64.7%), Castilla y León (-41.2%), and Aragon (-33.0%) experienced significant declines.
8. Attracting International Buyers: It’s worth noting that regions with the highest number of mortgages are also the most popular among foreign buyers. What might be considered a prohibitive interest rate for locals can be very advantageous for buyers hailing from countries with significantly higher interest rates.
In this evolving mortgage landscape, staying informed about these trends is crucial, whether you’re a local homebuyer or an international investor eyeing the Spanish real estate market.
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