The number of mortgages granted for residential properties fell by 15.7% in March, totaling 36,182 loans compared with March 2022, according to newly released data from the National Institute of Statistics. This year‑over‑year decline marks a second straight month of negative momentum in the housing credit market, following a 2% drop recorded in February, and signaling a cooling in demand for home lending.
Across the first quarter, the trend shows a continuing slowdown in new mortgage activity as lenders and borrowers adapt to changing financial conditions. The average loan size for residential mortgages declined by 1.5% year on year to 142,663 euros in March, while the total drawn capital dropped 17%, to 5,161.8 million euros. These figures reflect adjustments in both consumer appetite and lending terms amid evolving monetary policy and inflation control measures.
In terms of cost of borrowing, the average interest rate on all housing loans in March stood at 3.29%, the highest level observed since January 2017. This uptick aligns with central banks’ moves to tighten policy and cool inflation, influencing the cost of new mortgages and the risk assessments used by banks. The typical repayment horizon for housing loans remained long, averaging 24 years for the overall pool of mortgages.
When focusing specifically on houses, the average rate reached 2.99%, marking the highest reading since April 2017, with an average maturity around 25 years. The data illustrate how lenders balance long‑term funding costs with borrower demand, resulting in varied financing terms across the market.
Looking at rate structures, 36.1% of housing loans in March were signed with a variable rate, while 63.9% carried a fixed rate. At the outset, the average interest rate on variable rate residential mortgages was 2.72%, whereas fixed rate mortgages averaged 3.15%. These figures reveal a clear tilt toward fixed rate products as borrowers seek payment stability in a rising rate environment, even as some consumers still opt for variable arrangements to potentially benefit from future declines in rates. [INE data, 2025]
Overall, the March data underscore a cautious phase for the housing finance market. Banks appear to be tightening lending criteria slightly, even as competition persists for high‑quality borrowers, and households continue to weigh the tradeoffs between payment predictability and potential rate movements. The evolving mix of fixed and variable rate loans reflects both borrower preferences and lender risk management strategies in a higher interest rate landscape. [INE, 2025]
Experts note that the mortgage market often reacts to broader macroeconomic signals, including wage growth, housing supply conditions, and the pace of price changes in real estate. While total lending activity has moderated, the availability of different loan products and the ongoing adaptation of financing terms offer buyers a spectrum of choices. In markets with stable income growth and strong housing demand, fixed rate loans can provide budget certainty, whereas variable rate options may appeal to borrowers who expect rate stability or future improvements in borrowing costs. [INE, 2025]
From a planning perspective, prospective homebuyers and refinancers should consider the long‑term implications of loan duration, amortization schedules, and the total cost of ownership under varying rate scenarios. Financial professionals emphasize comparing annual percentage rates, closing costs, and the vulnerability of monthly payments to shifts in policy rates. Staying informed about central bank signals and housing market indicators can help households make prudent decisions in a fluctuating lending climate. [INE, 2025]