Santiago Martínez (Ibercaja)| The number of mortgages granted in Spain fell by -22.7% year-on-year in August, the average amount by -4.9% (to €138,171) and the total amount granted by -26.2%. As can be seen in the evolution of both sales and mortgages granted, the correction of the real estate market continues its course from transaction levels that seemed unsustainable if we take into account recent demographic trends and those expected for the coming years. So far this year, with accumulated data from January to August, the fall in the number of mortgages granted is -15.4%, in the average amount -2.3% and in the total amount granted -17.0%. The number of mortgages granted in twelve months had reached a peak of 467,000 in November 2022. In August 2023, this figure had fallen to 417,000.
Number of mortgages granted in 12 months
The catalyst for the downward adjustment in home sales and mortgages granted has been the rise in interest rates, the result of the European Central Bank’s restrictive policies to contain inflation. The monetary authority has raised the reference rate by 450 b.p., and this movement has been passed on, in a cushioned form, to mortgage interest rates. According to INE statistics, based on data from the Land Registry, the average interest rate at the start of mortgages was 3.25% in August, up 130 b.p. compared with 1.95% in August 2022 and 149 b.p. from the low of 1.76% in February 2022.
Average interest rate at the start of mortgages taken out
According to statements by the European Central Bank, interest rates will remain at high levels until the normalisation of consumer price growth is confirmed, so that this variable will continue to put downward pressure on the mortgage market over the coming months. On the positive side, mortgage interest rates seem to be approaching their cyclical maximum and the financial situation of Spanish households, in aggregate terms, is very healthy. Thus, the rate of decline in sales and mortgages granted is expected to moderate as we approach sustainable transaction levels in the medium and long term.
