A recent change to Spain’s mortgage law makes banks pay more of the set-up costs, which they have promptly passed onto consumers in the form of higher borrowing charges, reveal figures from the Bank of Spain.

The latest economic report touching on the housing and mortgage market from the Bank of Spain (BoS), which governs the Spanish banking system, reveals that new mortgages in Spain have been getting steadily more expensive for months, especially compared to other types of credit, and also compared to mortgages in other countries around Spain.

The BoS estimates that interest rates on new mortgage loans have increased by 30 basis points in recent months, which “has not been observed in other countries in our region,” says the report on the Spanish economy in Q2.

The higher interest costs of Spanish mortgages “could be related to the legislative changes introduced in our country in recent months relating to real estate loans and house sales.”

The BoS would be referring to a recent change to mortgage regulations passed by Parliament in March making lenders shoulder the cost of mortgage stamp duty and other costs that they are passing onto borrowers in the form of higher interest charges.

Transaction costs on homes and mortgages are high in Spain, which reduces real demand. Rather than do something really helpful like reduce transactions costs such as Stamp Duty, the latest regulations simply shift the burden from borrowers to lenders, who promptly pass the cost back in higher interest rates to borrowers. The net effect is that borrowers probably end up paying more over the lifetime of their loan. The consumer always pays.