As a mirror image of one of the busiest years on record for the Spanish property market, mortgage lending soared throughout the country in 2021.
The latest statistics from the Spanish Notaries’ Association show that the volume of loans surged by over 35%, with all regions seeing double-digit upticks. The Balearics topped the charts for the highest increase in the amount borrowed while Murcia, Catalonia and Andalusia registered the most significant rises in new mortgages.
New Spanish mortgage lending second-highest on record
Last year, banks and credit entities approved loans for 344,432 residential property sales in Spain. The figure ranks as the second-highest on the Spanish Notaries’ Association records, and well ahead of the 302,431 loans signed in final boom year of 2008.
Compared to 2020, a year whose statistics are always going to be skewed by the pandemic, the rise in volume equates to 35.7%. However, when you place 2021’s figures placed next to 2019, the volume of mortgage loans was 23% higher, indicating that the Spanish mortgage market was smouldering hot last year.
Double-digit increases all round
All regions saw an increase in mortgage lending of at least 20%. Even in the lowest, Asturias and the Basque Country, volumes still jumped by 20.8% and 24%, respectively.
At the other end of the scale (and almost off it) was Murcia, a region where loan volumes skyrocketed by 41.3% last year. Catalonia, with a 40.9% rise and Andalusia with 38.4%, were not far behind.
2.9% increase in average loan
In tandem with rising house prices – Notaries’ Association figures point to a 5.3% rise in 2021 as a whole – the average mortgage loan amount also went up. As a result, the median of €147,654 borrowed last year stands at 2.9% higher than the average in 2020.
All but three regions registered an increase in the amount loaned for a mortgage. The Canaries experienced the most significant (-3.9%) of the trio, while Galicia and Extremadura recorded more modest decreases of 1.9% and 0.7%.
Loans in the Balearics highest in the country
As the figures above show, the average for Spain as a whole hides substantial regional variations. The Balearics saw some of the highest property price hikes last year – double-digit monthly increases were common – and as a result, the islands recorded the highest loan value.
Mortgages were for an average of €233,026 on the Balearics last year, up 11.7% on 2020 and the biggest hike in Spain. Average loans in Madrid, the second region in the ranking, were almost €20,000 less at €213,631.
At the other extreme, property buyers in Extremadura and Murcia borrowed the lowest average amounts in the country. In these two regions, mortgages loans were typically for €91,227 and €91,775, respectively. However, average loans in Murcia increased by 4.1%, while those in Extremadura fell marginally in the year.
Euribor stays low
For its part, the 12-month Euribor (the base rate used to calculate interest payments on most mortgages in Spain) remained low and ended the year at -0.502. In the first two months of 2022 the rate has barely budged, meaning that mortgage interest rates remain close to historic lows.
Soar in foreign demand for mortgages
At Mortgage Direct, we can report a surge of interest in loans from foreign buyers during 2021. Last year, our enquiries rose by 63% compared to 2020 and the average mortgage went up by almost 50%. Our clients borrowed an average of €324,000, a figure that rises to €2,021,066 for properties valued at over €1 million.
With clients from over 40 countries, we predict a strong first semester for the Spanish mortgage market. “With very few travel restrictions now in place, both for our European and North American clients, we feel that 2022 will follow last year’s pattern,” said Katherine Walkerdine, a founding partner at Mortgage Direct.