Santos González, president of the Spanish Mortgage Association (AHE), visited Alicante this Thursday to participate in the congress Housing: Current Issues organized by the Bienvenido Oliver Head of Real Estate Law at the University of Alicante. There he analyzed the market situation and gave this interview.
Latest data points to a 29.6% drop in mortgage lending in September; How long will loans continue to decrease?
This is closely linked to the rise in interest rates, which logically delays the purchase of a home and, subsequently, the application for a mortgage. It is also necessary to take into account that this decrease has a significant statistical component when compared to 2022, which is an extremely good year. However, as long as interest rates remain high, purchases and mortgages will continue to be delayed. Therefore, this situation will continue for a few more months.
So what predictions do you have about the development of interest rates?
It’s always difficult to talk about interest rates because we have to look at the European Central Bank, which manages the time there. What we do know, Ms. (Christine) Lagarde said, is that we have already reached the maximum. And in fact the market does not take into account that this is already the case. When will they land? Well, the latest inflation data is very good, it is reasonable to think that as long as we have two, three, four months, inflation will decrease. I expect we will start to see a slight decline in the first half of next year.
How will it affect the real estate market?
The first thing to consider is the structure of the real estate market, which focuses on average incomes, investors, people who now have money in the bank and are buying apartments without getting a salary. There are also a lot of foreigners who come and buy homes and don’t have a mortgage. This makes the demand structure of the real estate market strong. The real problem is with young people and low-income people, but they are not part of the market right now.
Why didn’t the Government’s Code of Good Practice for mortgage holders work, which received little demand?
Yes it worked. The point is that predictions that it would affect a million people were exaggerations. What we see is that bad debts do not increase and banks are able to renegotiate with their customers.
That’s another big question: Why haven’t delinquencies increased further and mortgages become more expensive?
This is possible because family budgets are being readjusted. We are talking about the fact that home buyers in our country are mostly not vulnerable people, people who have difficulty filling the shopping cart at the end of the month. We are talking about people whose income level is slightly higher and who also have savings. Therefore, renegotiations and partial early cancellations occur as they choose to allocate the money in the account that is not rented to them to reduce the mortgage balance. They are also restructuring their spending. If you have to pay 200 or 300 euros more on your mortgage, then you will pay less or your holiday will be shorter. In short, I think this is the seriousness of families.