Mortgage lending in Spain hit a 14-year high in early 2025, with banks granting 243,257 home loans—a 25% increase over last year. Discover the factors behind this mortgage boom and what it means for Spain’s real estate market.
Spain’s Mortgage Lending Soars to Highest Level Since 2011: Key Figures and Trends in 2025
Spain’s mortgage market has hit a milestone not seen in over a decade, fueled by renewed demand and attractive interest rates.
According to the latest data from the National Institute of Statistics (INE), Spanish banks granted a remarkable 243,257 mortgages secured against homes in the first half of 2025—an almost 25% increase compared to the same period last year, marking the best figures since 2011.
Record Mortgage Approvals Mark a Real Estate Comeback
Between January and June 2025, mortgage lending in Spain not only rebounded but also kept pace with the heights of 2011, when a record 243,632 loans were granted. In June alone, 41,834 home loans were approved, the highest monthly figure since June 2022, solidifying the ongoing resurgence in Spain’s housing market after a decade-long slump.
This robust growth comes despite a previous sharp decline which followed the bursting of the housing bubble in 2008. For comparison, from 2003 to 2011—often referred to as the “brick boom” years—an average of 496,900 mortgages were issued in the first half annually. This figure plummeted post-2011, with only 146,841 half-year approvals on average between 2012 and 2020. After the pandemic, however, the market began booming again, consistently registering over 200,000 first-half mortgage approvals, except for 2024.
Low Interest Rates Drive Demand
A key catalyst behind this surge is the historically low cost of borrowing. In June 2025, the average mortgage interest rate stood at just 2.99%, slightly up from May’s 2.91% but still below the symbolic 3% threshold for the fifth consecutive month. This sustained low rate encourages both first-time buyers and upgraders to take out new mortgages, even as ECB interest rates remain elevated overall.
Larger Mortgage Amounts Reflect Rising Housing Prices
This lending boom is also mirrored in the size of mortgages and total capital lent. As of June, the average mortgage amount had jumped 15.5% year-on-year to €168,363, with the total capital lent soaring by 52% to over €7 billion. However, these figures also highlight a significant challenge—the ongoing rise in house prices, particularly in high-demand areas like Madrid, the Mediterranean coast, the Canary Islands, and other major cities. Higher prices threaten the affordability for younger buyers and those with limited savings, possibly excluding them from the property market.
Borrowers Favor Fixed-Rate Mortgages
Market uncertainty and fluctuating rates have also shifted consumer behavior. Currently, only 28% of new mortgages are variable rate, while an overwhelming 72% are fixed rate mortgages—the highest share since August 2022. Borrowers continue to lock in stable monthly payments to shield themselves from unpredictable Euribor fluctuations. Subrogations (switching mortgage terms or lender to secure better deals) are also on the rise as homeowners look to capitalize on new, favorable lending conditions.
Outlook: Risks and Opportunities Ahead
While Spain’s mortgage market is enjoying its best period in fourteen years, risks remain. Foremost is the escalation of housing prices, which could shut many aspiring buyers out of the market. As the Euribor stabilizes and loses some of its downward momentum, any reduction in financial relief from lower rates may further challenge affordability.
The Spanish mortgage market’s strong comeback in 2025 signals renewed confidence among banks and homebuyers alike. While fixed-rate loans and low interest rates spur demand, rising home prices highlight the urgent need for measures addressing housing affordability, especially for young and first-time buyers. Whether Spain’s real estate sector can sustain this momentum will depend on how both the supply and affordability challenges are addressed in the coming months.
