A record number of borrowers renegotiating their mortgage conditions suggests growing distress with rising interest rates at the same time as mortgage delinquency foreclosures fell to a record low in the first quarter.

According to figures just published by the National Statistics Institute (INE) there were just 3,693 foreclosures started by lenders in the first quarter of this year, down 31% on the same period last year, and the lowest level on record for a first quarter, as illustrated by the chart above.

Taking a longer view (next chart) the downward trend in foreclosures is pronounced, with a decline from 19,024 in Q1 2014 to 3,693 this year, a percentage decline of more than 80%.

The foreclosure decline was smallest in Catalonia and the Balearics (-16%), and highest in the Canaries (-32%) and Andalusia (-33%). Foreclosures on homes that were purchased as new (from a builder, with no previous owner) were down 64%.

At the same time the Bank of Spain reports that the level of mortgage loan renegotiations hit a record level in April, with changes to mortgage conditions affecting loans with a combined outstanding value of 2.5 billion euros, the highest level on record since the Bank started publishing this data in 2015. The April figure was higher than for the whole of 2022 (1.9 billion).

Clearly the big increase in interest rates over the last 18 months (from -0.502% in December 2021 to 3.862% in May) has forced a record number of borrowers to try negotiating better conditions with their lenders, and the record low number of foreclosures suggest banks are giving borrowers more breathing room than used to be the case in the past.

Research the mortgage foreclosure data in Spain.