Home mortgage market shows signs of moderation in Spain despite slight drop in loan applications

Mortgages in Spain Experience 10% Drop and Highest Interest Rates in Nearly 10 Years at Start of Year

In January 2024, the mortgage firm in Spain recorded a 10% drop compared to the same month in 2023, with a total of 33,128 loans. This marks the least pronounced drop in the past 12 months of consecutive negative rates. The average interest rate for home mortgages increased to 3.46%, which is the highest since December 2014.

The autonomous communities with the most mortgages on homes in January were Madrid, Andalusia, and Catalonia. However, some regions experienced a decrease in home mortgages compared to the previous year, with only a few regions showing an increase. Changes in mortgage conditions have also decreased, with notable growth in entity changes.

The number of mortgages on rural and urban properties decreased by 11.1% in January compared to the previous year, with the total capital of mortgage loans granted also decreasing. This trend is expected to continue as interest rates fall and competition among financial institutions intensifies.

According to Beatriz Toribio, general secretary of the Association of Builders Promoters of Spain, this overall trend indicates a moderation in mortgage financing. She predicts that this trend will continue as the European Central Bank is expected to lower interest rates further. The average interest rate for variable rate mortgages was 3.24%, and for fixed rate mortgages was 3.64%.

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