During 266 thousand 350 mortgages were signed in the first half of this yearAccording to the National Institute of Statistics (INE), 76% of them had a house as collateral. The data recorded in the first half of 2023 is quite similar to that of 2021 and 2019, the last year before the start of the covid pandemic, although the number of cases is 14% lower than in the same period in 2022, which was a record year. sales.
Most experts agree that the figures for the first half of the year, although lower than for 2022, are not bad. “This is one of the highest numbers since 2011. When we put the data in perspective, we’re not that bad,” he notes. Richard GarrigaCEO of Trioteca, one of Spain’s most important mortgage brokers. But professor at the University of Barcelona (UB) and one of the leading real estate economists Gonzalo Bernardos He thinks the mortgage lending company is “going bankrupt” and “banks are not meeting their goals.”
The Spanish Mortgage Association (AHE) does not give a “positive reading” of these data. “We are coming from an unsustainable growth scenario, but we were surprised at how large the declines recorded in recent months were, as the current macroeconomic context is solid,” he notes. Leyre LopezAHE analyst.
Reason for interest rate increase
Santiago CarbonDirector of Financial Research at Funcas, the economic research center of CECA, the association representing the former savings banks, confirms that the decline in mortgage issuance is due “mainly to the increase in the cost of credit due to high interest rates” in an environment where banks, on the other hand, are “trying to keep defaults to a minimum”. Garriga also thinks that the rise in Euribor has braked housing purchases and adds: “The interest rate increase can either accelerate or slow down real estate sales, but this time it was the second one.”
Banking sources also state that this contraction in signing mortgage loans is largely due to families. “They are now acting more cautiously and banks are acting responsibly.” While giving loans to avoid risks.” The same sources say that the demand, after Euribor’s rise from 0% to 4% is much more limited than months ago.
Bernardos predicts “at best” 400,000 new mortgages will be signed through 2023. “With the increase in interest rates, banks have a guaranteed income statement. For this reason, they do not want the mortgages they provide to default and have been extremely careful. However, I would not be surprised if this continues. Therefore, they are becoming more flexible towards the end of the year,” he states. Although Funcas does not make a definitive prediction, he states that they expect “a significant decrease compared to the past” this year if economic uncertainty continues and the rise in interest rates continues.
The economist from the University of Barcelona points out that there will be a decrease in the number of housing transactions and prices this year because he noticed that there is a difference between the offer prices of real estate on real estate portals and the prices offered by the houses. sales are closed. “With the increase in interest rates, the buyer can pay much less. In this case, it is not possible for the market to remain inactive,” he adds.
However, Funcas Director of Financial Research expects housing prices to fall slightly in 2023. “There may be a decrease of 1 percent, but in any case Spain is not a single market. In some of these markets, for example Housing prices do not decrease in main urban centers” he emphasizes.
improve conditions
In the first half of the year, many Spaniards took advantage of this situation and tried to improve mortgage conditions. In fact, more than half of the loans closed at Trioteca in recent weeks were due to changes in existing loans, Garriga details. “We’re seeing a tremendous upward trend in people changing their mortgages.”he states.
Most of these changes are registered as a new mortgage at the National Statistics Institute (INE). Bernardos explains: “When most banks make an offer to improve terms, they ask to cancel the existing loan and open a new loan to avoid irreversible work.” The Economist estimates that 40,000 new mortgages were closed between January and June, and that these were actually refinancings of existing loans.
Although the variable rate has rebounded, the majority of new mortgages signed between January and June continue to be fixed rate, according to INE. Because? This public institution classifies this type as mixed mortgages with a fixed coupon of five or 10 years and reference to installment Euribor and differential from that date.
Trioteca CEO states that for now, mortgages continue to be given at rates below the reference rates. In August, they offered fixed-rate housing loans with an average rate of less than 3 percent, mixed loans with a rate of 2.5 percent in the first years, and then closed the gap with Euribor to less than 1 percent.
In addition to improving their terms, many mortgage holders choose to partially or fully amortize their loans. For this reason, banking sources explain that they detected a “strong depreciation” in the first half. Decreases in Spanish mortgage balances have been recorded since August 2022, according to the Bank of Spain and In July, volume fell below 500 billion for the first time since 2006 euro.
The last minimum level in mortgage balance was recorded in 2020 at just over 504,000 million. However, with the outbreak of the health crisis and the temperature of interest rates around zero and the negative Euribor, the mortgage debt of Spanish families increased to over 511 billion; this trend will make a comeback in 2022, leading to a decline in outstanding debt. The balance in the first half of 2023.
Spanish Mortgage Association The outstanding balance is not expected to experience major declines, but the downward trend is expected to continue.