This year 2024 could be a mortgage market recovery. To achieve this, several factors must first be combined: Housing interest rates are fallingIt is stated that Euribor values will also decrease and housing prices will become cheaper, especially in cities where demand is high.
In the iAhorro Index for the last quarter of 2023, the latest analysis of the Spanish mortgage market published by mortgage comparator and advisor iAhorro, we already see a slight decrease in the average interest rates at which Spaniards sign Mortgage loans with October. and Euribor, whose average values also decreased in December, completed the year below 4%, despite recording the highest figure of 15 years (4.160%) in October: It closed December at 3.679%. However, the determining variable is still the housing pricesIts rise will not stop throughout 2023 and they are expected to continue rising.
Also, according to data collected by iAhorro, the average price of houses purchased by mortgage comparator users in 2023 was €279,574; This figure is higher than that recorded in both 2022 (€278,822) and 2021 (€238,979). The mortgage market was breaking records. “Prices continued to increase in regions where demand was high”, explains Marcel Beyer, managing director of the mortgage comparator.
Madrid records the highest average house price; Murcia lowest
When we look at the autonomous community data registered in the iAhorro Index, we see that the highest average housing price throughout 2023 was recorded in 2023. Community of Madrid with an average of 341,000 Euros. These are followed by the Balearic Islands, with an average house price of 315,000 euros, and Catalonia, which has already fallen below 300,000 euros on average, specifically 296,000 euros. On the contrary, the lowest prices were recorded by iAhorro users who purchased. Murcia, with an average of 166,000 euros; in Castilla y León (195,000 euros) and in Castilla-La Mancha (197,000 euros).
“The Madrid region has the highest average house price due to high demand. Moreover, high rental prices They also make buying (and then renting) a house as an investment very profitable in almost any region, even in remote areas where you can find better prices with quite high rents. “For this reason, it is clear that this region is at the top of the average purchase price ranking in iAhorro,” said Beyer, adding that “the main reason for the high price of the Balearic Islands is the shortage of housing and the availability of second residences or residences.” high demand holiday home Catalonia’s situation is also similar to Madrid’s, but it has more developable land, which causes the average price to fall slightly: buying in the province of Barcelona is not the same as buying in Girona or Lleida.”
However, this average mortgage amounts Increases in demand in Spain. Moreover, these have decreased. According to iAhorro, users who signed their mortgage with the comparator in 2023 requested an average of 176,944 euros from the bank, despite the fact that house prices were slightly higher; this is a lower amount than they requested in 2022 (187,113 euros). Low.
Why is this happening? The CEO of iAhorro responds: “The increase in interest rates prevents citizens from being able to afford high mortgage loans, because otherwise their payments and the risk of non-payment will increase rapidly.” So now, in order for the bank to give them a mortgage, they need to save more and borrow less at higher interest rates. This has been largely driven by the fact that banks provide financing above 80% of the house price, with increasing difficulties to ensure that customers do not exceed 80% of the house price. debt ratio The Bank of Spain’s advice: to pay no more than 30-35% of their net monthly salary into their homes.
Fixed rates are falling but still around 3% TIN
While the average fixed rates signed by mortgage comparator users throughout 2023 was 2.88% NIR, the month with the lowest average interest rate was January (2.43%) and the month with the lowest average interest rate was October (highest at 2.43%) recorded the rate (3.16%). However, the increase was progressive and September was a turning point, as it was the first month when the average NUR of 3% on fixed mortgages was exceeded by 3.11%. However, since October, interest rates It is falling slightly: in November it was on average 3.13%, and in December this rate fell to 3.13%. 3.03% NUR, the lowest figure since August.
But the CEO of iAhorro characterizes this data as follows: “Despite the fact that average fixed rates exceed 3% TIN, we had users who were able to sign fixed mortgages at around 2% throughout the year, because banks continue to offer good offers to customers with very good profiles.” So much so that, for example, in the last quarter of 2023, many iAhorro users achieved the following results: Fixed mortgages close to 2.5% TINAlthough these are very specific cases.
The rise or fall of fixed mortgage interest rates largely depends on the decisions made by the bank. European Central Bank According to official interest rates, it currently stands at 4.5%. Let’s remember that the ECB made 10 consecutive increases in these rates between July 2022 and September 2023, but decided to paralyze these increases in both October and December. The next meeting of the body chaired by Christine Lagarde will be on Thursday, January 25, and the next on March 7, with official rates expected to remain at the current 4.5% at both.
From these two dates, the managing director of iAhorro believes: “The ECB can start reducing official interest rates, albeit very slowly, from the second quarter of 2024, and then the banking sector can also start reducing interest rates.” mortgage offers are cheaper,” which could lead to fixed mortgages “recovering ground lost in favor of blended mortgages last year.”
Mixed mortgages reduce the impact of variable mortgages
Fixed mortgage is the mortgage that provides the most security to mortgage holders in times of uncertainty, and although it has been the most preferred mortgage of mortgage holders for many years, it currently has a market share of around 20%. Spaniards, of course, continue to prefer this over variable mortgages, which record worse contract data month by month, according to iAhorro figures. For example, in the fourth quarter of 2023 Reached only 9% of total signatures In December, it decreased to 5.86%.
This is undoubtedly due to the high data Euribor still records; This index is an index that shows the interest rate that mortgage holders pay for this loan, to which the difference agreed with the bank must also be added. Therefore, the majority of variable mortgages signed in 2023 will be between 4% and 5% NIR; These data are much higher than those of fixed mortgages and, above all, mixed mortgages.
According to data from the iAhorro Index, the average interest rate of hybrid mortgages signed by comparison users in the last quarter of 2023 stood at 2.26% NIR, 0.84 points below the average fixed rate recorded in the same period (3.10% TIN). ) and 1.4 points below the Euribor figure for December (3.679%). Moreover, in recent quarters, this interest rate decreased to an average of 2.34% TIN in October, to 2.31% TIN in November and to an average of 2.15% TIN in November. fixed portion of hybrid mortgages (early years) in December.
It is true that the second part of mixed mortgages is also affected by Euribor values. However, the fact that the interest rates in the first years are even lower than the 100% fixed mortgage loan makes this mortgage loan a highly sought-after product in this period when Euribor is on the rise. So much so that this year the mixed mortgage has become the queen of the market Most requested by users and top sellers by banks: On the iAhorro mortgage comparator, mortgage contract percentages were recorded as mixed above 70% in October (72.25%), November (72.22%) and December 2023 (71.30%).