After years of being one of the cheapest countries in Europe for mortgages, Spain is now firmly in the expensive mortgage camp. According to a recent study by the European Mortgage Federation, typical mortgage interest rates in Spain are now the 10th most expensive out of a group of 15 European countries analysed.
The study reveals that, during the last quarter of 2007, the most frequently used mortgage interest rate in Spain was 5.76%, compared to 4.35% in Denmark. Along with Denmark, mortgages interest rates were lower in France, Greece, Sweden, Belgium, Germany, Ireland, Italy, and Lithuania, but more expensive in the UK, Slovenia, Poland, Estonia and Hungary.
By the first quarter of 2008, the most frequently granted mortgage interest rate in Spain had fallen to 5.67%, which was still almost 100 basis points higher than the most popular mortgage interest rate in France (4.70%).
Spanish mortgage rates fell slightly in the first quarter of the year despite the credit crunch, which made itself felt more through reduced lending and tighter lending criteria than higher interest rates. In the second quarter mortgage rates started to rise again, with the average rate hitting 5.90% in June, according to the Bank of Spain. In its latest report on the economy, the bank said that not only are banks lending less, but they are charging more too.