This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
A summary of the Spanish mortgage market data released in the third quarter of 2021 – interest rates, mortgage values, and new mortgage lending volumes in Spain.
12-month Euribor (the base rate used to calculate interest payments on most mortgages in Spain) ended the quarter at -0.492 as a monthly average (chart above), compared to -0.414 the same month a year before, meaning a negative rate 19% larger than it was 12 months before.
As a result, borrowers in Spain with annually resetting Spanish mortgages based on Euribor would have seen their monthly repayments fall by around €4 per month for a typical €120,000 loan with a 20 year term.
Euribor is still near the all-time low it reached in January, but with inflation on the rise in the Eurozone the European Central Bank might be forced to raise rates soon given the influence of the German inflation hawks. Eurozone inflation was 3.4% in September, well above the ECB’s target of 2%. In Spain, inflation is already at 4% and rising. This makes property an attractive inflation-proof investment, especially with a fixed-rate mortgage below the inflation rate.
Spanish mortgage lending
There were 20,187 new residential mortgage loans signed in August, up 12% on last year, with an average value of 132,940€, down 1.6%, according to the Association of Spanish Notaries.
The next chart shows how mortgage lending fell at the start of the pandemic in the first quarter of 2020, then bounced back strongly in the same period this year. The lockdown comparison surge is now wearing off, but lending is still strong, and helps explain why the Spanish property market looks so perky after the pandemic. Banks have not turned off the lending taps as some expected them to with an economic crisis looming.
Spanish mortgage lending by region
Andalusia was the biggest mortgage market as usual, followed by Catalonia and Madrid. New lending rose the most in the islands, up almost 50% in the Balearics, and 35% in the Canaries, but fell slightly in Madrid. The final chart shows that new mortgage lending is still very strong in regions of interest to buyers from abroad.
