Spain’s real estate market is buzzing with activity, hitting new highs in the mortgage sector. According to the latest data from the National Institute of Statistics (INE), October 2023 saw the strongest month for home loans in over 15 years. Each day, an average of 2,270 new mortgages were signed, amounting to a staggering 52,198 contracts by month’s end.
Fixed-Rate Mortgages Dominate the Scene
One of the most notable trends is the rise of fixed-rate mortgages. For the first time in 15 years, six out of ten new home loans are fixed, making up 61.3% (31,997) of all mortgages signed in October. The remaining 38.7% (20,201) were variable-rate loans. This shift reflects Spaniards’ growing preference for payment stability amidst a fluctuating economy and relatively low interest rates.
Attractive Loan Conditions Fuel Demand
Mortgage rates remain notably low, with October seeing an average interest rate of just 2.81%—the lowest since early 2023 and marking nine straight months under 3%. This favorable environment has maintained a 16-month upward trend in mortgage approvals, as buyers rush to lock in favorable rates before potential upward shifts in the market.
If you secured the average fixed-rate mortgage in October (2.81% for 26 years), your monthly payment would be around €755.35. However, with rising home prices—the fastest seen since 2007—families are needing to borrow ever-larger amounts. The average mortgage loan size jumped by 10.4% in one year to €167,080, placing extra strain on household budgets.
The Housing Market Paradox: High Demand Meets Low Supply
Banks continue to offer competitive mortgage deals, feeding robust demand. However, the housing supply remains tight, creating a paradoxical situation: mortgage and sales figures are at their highest levels, yet many buyers find it increasingly tough to secure homes. This “market tension” hints at more price hikes on the horizon, making access to homeownership a growing challenge for many Spaniards.
As the Euribor remains relatively stable, experts predict that banks may pivot towards more conservative products in the coming year, potentially ending the fierce competition seen among lenders in recent months.
Looking Ahead
For now, Spain’s mortgage market is in full swing, supported by historically low rates and a strong appetite for fixed products. But with rising prices and limited supply, buyers may need to act quickly—or brace themselves for even greater challenges as 2024 unfolds.
Thinking about buying a home in Spain? Now might be a pivotal time to assess your options, as the window for advantageous mortgage conditions could be closing soon. Stay tuned for more updates on the Spanish real estate and mortgage trends.
