Housing Mortgage Activity in August Shows Sharp Shifts
Mortgage activity in housing declined by 22.7 percent in August when compared with the same month the previous year, totaling 28,344 new loans. The average interest rate continued its upward climb, reaching 3.25 percent, the highest level seen since July 2016, according to data released this Wednesday by the National Institute of Statistics. This trend reflects a sustained tightening in borrowing costs and a cooling in demand for new home financing.
Mortgage lending chains reported an annual drop in August, with seven consecutive months of negative performance in interest rates. August proved more pronounced than July, which had recorded a 18.8 percent decrease. The August figure of 28,344 housing loans stands as the second lowest since January 2021, with only April near the present year showing a comparable level of activity at just over 27,000 new mortgages.
During August, the average loan amount granted to homes fell 4.6 percent year over year to 138,171 euros, while the total loaned capital dropped 26.2 percent to approximately 3.9163 billion euros. Among the autonomous communities, Andalusia led with 6,046 mortgages, followed by Catalonia with 4,472 and Madrid with 4,139. In terms of capital mobilized for new home credit, Madrid topped the list with 853.3 million euros, ahead of Andalusia at 788.9 million and Catalonia at 694.6 million.
Only two communities posted year over year gains in August: the Canary Islands by 11.8 percent and Murcia by 4 percent. The other regions faced declines, with Cantabria down 34.9 percent, Madrid down 31.4 percent, and the Valencian Community down 30.6 percent. On a month-to-month basis from July to August, housing loans declined by 3 percent and loan capital by 6.6 percent, marking the largest August drop since 2020. In the first eight months of the year, housing loans fell 15.4 percent, loan capital dropped 17 percent, and the average loan amount decreased 1.9 percent.
Interest Rates Reach a Seven-Year High
As part of a monetary policy path aimed at taming inflation and balancing Euribor trends, the average interest rate on all housing loans rose to 3.62 percent in August, the highest since October 2014. The typical loan term stretches around 23 years. Roughly 43.4 percent of mortgages carried variable rates while 56.6 percent carried fixed rates. Initially, the average rate stood at 3.38 percent for variable mortgages and 3.92 percent for fixed ones. For houses specifically, the average rate climbed to 3.25 percent, with an average term of about 24 years. Compared with the prior year, the overall average rate increased by 1.3 percentage points, continuing the trend of rates staying above 3 percent for multiple months.
In August, 42.1 percent of residential mortgages were signed with a variable rate and 57.9 percent with a fixed rate. The initial averages were 2.89 percent for variable rate loans and 3.54 percent for fixed rate loans. Earlier analyses by INE reviewed statistical series of interest rates since January 2020 after a new procedure was launched to verify the results of the average initial rate on established mortgages.
Total Mortgages on Rural and Urban Properties Dips
The total number of mortgages on rural and urban properties, which includes houses, fell by 24.3 percent in August versus the same month in 2022, reaching 36,320 loans. The capital allocated to new mortgage lending dropped 10.2 percent in August, while the average mortgage amount by residence rose 18.7 percent to 183,498 euros on average.
Mortgages Rise as Terms Change
Last August recorded 10,474 mortgages undergoing term changes, a 4.5 percent rise from the same month in 2022. Considering the type of modification, there were 8,270 renewals or changes with the same financial institution, up 4.1 percent over the prior year. There were 1,853 cases of subrogation to a new creditor, a 32 percent increase from August 2022, while in 351 mortgages the borrower was substituted, a reduction of 47.5 percent year over year. Of the mortgages with changed status, 38 percent occurred due to changes in interest rates. With the adjustment of conditions, fixed-rate housing loans increased from 11.8 percent to 35.6 percent, while the share of variable-rate housing loans fell from 87.2 percent to 63.6 percent.
Among variable rate loans, Euribor remains the predominant reference rate. Before and after rate adjustments, it accounted for the majority of variable rate mortgages. After changes, the average rate on variable-rate mortgages rose by 0.3 percentage points, while fixed-rate mortgage rates increased by about 0.4 percentage points.
These figures come from the statistical analysis of mortgage activity conducted by the National Institute of Statistics, which continues to monitor the evolution of housing finance and its implications for households and markets. The data highlight how shifting rate conditions and term adjustments are shaping borrowing behavior and home ownership trajectories across the country.
Related posts:
Mortgage trends and rate changes in October across regions Mortgage Rate Trends in Spain: Fixed and Variable Plans Rewritten: Variable vs Fixed Mortgage Case Study with iAhorro Simulation What is a variable mortgage, and how do fixed and mixed loans compare? A practical look at consumer knowledge and market trends Spain’s Mixed Rate Mortgage Trend: Growth, Pricing, and Market Impact Mortgage Trends in Moscow and Central District Markets in 2023–2023 Mortgage market trends and what they mean for borrowers State-Driven Mortgage Programs and Regional Rate Differentiation {Title Placeholder} Rewrite of Mortgage Market Trends in Mixed Rate Contracts Mortgage Trends Across Spanish Regions: 2023 November Update Russian Mortgage Market: Macroprudential Limits and Bills