The number of new mortgages signed in June rose by 7.2% compared to May, suggesting that the mortgage market may be starting to recover from the credit crunch. Optimists argue this will breathe life back into the property market.

On a year on year basis, however, new mortgages signed in June were still 10.8% below the same month last year, showing that the market still has some way to go before it recovers to former levels.

These figures, from Spain’s National Institute of Statistics, also reveal that accumulated new mortgage signings were down 31% in the first 6 months of the year compared to the same period last year.

By value, new mortgages in June fell 6% year on year, but rose 4% month on month.

The average value fell 10% year on year to 142,700 Euros, but was up 5% on the previous month. In some regions, especially those where property prices are highest, the fall was more drastic. Average mortgage values fell 19% in Madrid, and 25% in Barcelona.

Average mortgage values are also down heavily in popular holiday home destinations like Malaga (Costa del Sol), down 24.5%, and The Balearics, down 30%.

The average interest rate was 4.47%, 13.8% lower than a year ago and 2.9% lower than the previous month. This figure shows that banks are passing on only a fraction of the fall in base rates to customers. Base rates are down 70% compared to June last year.

The average monthly mortgage payment has fallen from 845 Euros in June 2008, to 702 Euros today.