The European Central Bank raised interest rates in March 2022, and this move, tied to Euribor, the interbank rate used by most mortgage loans, continues to influence the housing market. Mortgage rates average around 3.24 percent, as reported by the National Institute of Statistics. Yet more Spaniards and foreign buyers are choosing to purchase homes without financing.
UVE Valoraciones reports that by 2023 annualized figures, 204,859 homes were bought without mortgage funding. Since the pandemic began in 2020, the share of cash buyers has nearly doubled. Even as mortgage originations have declined in recent months, the pace of cash purchases remained steady last year.
In the near term, the number of buyers obtaining financing is unlikely to rise. People who can pay in cash avoid the effects of higher rates and are not swayed by less profitable alternative investments. Escalating rents also pose a risk, which motivates investment in tangible assets to guard against inflation, say analysts at UVE Valoraciones.
For the first time in four years, the share of mortgaged purchases has fallen from about seven in ten to roughly two in three. The trend is more pronounced in newly built properties. Aedas Homes reported that in its 2022 New Construction Buyer Profile, only half of buyers financed the purchase of their property. This rate is higher than the share of financed purchases on the market as a whole.
Provinces where mortgage financing is less common
There is a clear regional pattern. Provinces with a strong tourism component and those with features that suggest more cash-based transactions show higher rates of debt-free purchases. In contrast, the Basque Country, Madrid, Seville, Barcelona, Valladolid, and Zaragoza exhibit lower shares of cash transactions, according to UVE Valoraciones.
In total, Alicante, Malaga, Valencia and Barcelona report the highest numbers of debt-free purchases, with 33,477, 16,144, 13,859 and 13,859 units respectively. The list continues with Murcia (9,868), Almería (7,073), Madrid (6,716), Girona (6,677), Tarragona (6,669), Santa Cruz de Tenerife (5,968), Castellón (5,860), the Balearic Islands (5,439) and Granada (5,347).
Alicante stands out not only for the total volume but also for its share. About one in three homes changing hands is financed by debt, roughly 65 percent, meaning two in three are debt-free. Other provinces exceeding the 50 percent mark include Ávila (62 percent), Zamora (56 percent), Castellón (52 percent), Cuenca (51 percent), Lugo (51 percent) and Soria (50 percent).
On the other end, Gipuzkoa, Vizcaya, Álava and Madrid show the highest financing intensities, with mortgages used for the vast majority of purchases. Percentages above 70 percent are common in Seville, Melilla, Barcelona, Pontevedra, Ceuta, Zaragoza, Valladolid, Córdoba and Badajoz.
Does mortgage scarcity affect prices
The valuation study indicates that regions with higher financing shares tend to see price declines more often. In Madrid, Barcelona, the Basque Country and Navarra, transaction growth has been slow since 2019. The reason is a persistent housing deficit in these areas. In tourist zones, where purchase rates remain high, a lack of financing can push prices higher. For buyers seeking homes for personal use in those markets and needing financing themselves, affordability pressures may intensify as prices rise and purchasing power weakens.