The granting of mortgages on homes in Spain rose by 4.5% year-on-year in April, but suffered a drop of 22.9% compared to March 2022, the largest month-on-month decrease since August 2020, which according to industry experts could point to a slowdown due to the foreseeable increases in interest rates.
According to reported on Friday the National Institute of Statistics (INE)the number of mortgages signed follows the positive trend of the last 14 months, but the uncertainty generated by the war in Russia and Ukraine and interest increases could already be affecting this indicator, which showed the lowest rate since February 2021.
“With a war conflict on European soil that does not end, the first increase in interest rates (by the European Central Bank) scheduled for July will have a direct impact on the real estate sector through the increase in the cost of mortgage loans,” said María Matos, Director of Studies and Spokesperson for Fotocasa.
“This change in trend will probably slow down little by little this great real estate activity that we have been registering since last year,” he added.
Data published by the INE showed that the number of mortgages on mortgaged properties in April reached 33,423, the lowest level since December 2021 and 9,955 less than the previous month.
The report also shows a record for fixed rate mortgages of 75.3%, compared to 24.7% at a variable rate, the maximum since there are records, according to an INE spokesman, which would be largely explained by fear to a radical increase in the cost of loans in the eurozone.
“This granting of fixed-rate mortgages is a clear reflection of the uncertainty that exists about the future of the Euribor. (…) Many families prefer to close a fixed-rate mortgage, than face a possible rise in the fee in the future Matos added.
The ECB said in early June that in order to combat the inflationary spiral it would raise benchmark interest rates – currently at record lows – by 25 basis points in July and again in September, when it could apply a higher increase if the outlook of prices have not improved.
However, the market contemplates the possibility that the increases will be higher, in line with what was expressed by some members of the ECB itself.
“Average interest rates (…) do not yet reflect the rise in prices that banks are already applying due to strong rumors of rate hikes in Europe and the inflationary environment in which we are installed,” said Juan Villén, head of of Idealista mortgages.
According to INE data, the capital borrowed in mortgages to buy a home increased by 6.8% year-on-year in April, the lowest growth since February 2021, with an amount of 4,754 million euros, 1,566 million less than in the previous month .
“The data for the month of April already show the announced slowdown in growth compared to the beginning of the year, which will most likely be maintained in the statistics published in the coming months,” agreed Villén.
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