A summary of the Spanish mortgage market data released in the third quarter of 2019 – interest rates, mortgage costs, and mortgage market lending volumes in Spain.

12-month Euribor, the base rate used to calculate interest payments on most mortgages in Spain, came in at -0.339 on average in September compared to -0.166 the same time last year, so more than twice as low as it was a year ago.

As a result, borrowers in Spain with annually resetting Spanish mortgages based on Euribor will see their repayments fall by around €9 per month for a typical €120,000 loan with a 20 year term.

Euribor has now been in negative territory since February 2016 as a result of the ECB’s loose monetary policy intended to keep the wheels from spinning off the Eurozone economy. Every time rates start to creep up the Governor of the European Central Bank, Mario Draghi, steps into announce that monetary policy will be kept loose for the foreseeable future. Nobody knows how this will end, but negative interest rates are here to stay for now.

Mortgage lending volumes in August 2019

Provisional data from the Association of Spanish Notaries shows new residential loans up 2.3% to 15,859 signings in August with an average value of €133,116, up 4.6%. However, mortgage lending was down 20.4% in July, so it is likely that overall new lending in Q3 will be lower year-on-year once the data for September is published.

The left-hand chart below shows how mortgage lending has been growing since 2014 but is still around 75% below what it was in 2007. And the chart on the right shows how LTVs have fallen to around 76%, whilst more than 50% of buyers now use a mortgage, up from 30% in 2013. These charts suggest there is no risk of a credit-fueled housing bubble inflating anytime soon.