Mark Stücklin
The number of Spanish homes being repossessed by lenders hit a record low in the first quarter of 2024, reveal the latest (backward looking) figures from the National Institute of Statistics (INE), but more timely figures suggest the trend might be about to change.
There were just 3,317 Spanish mortgage foreclosures registered with the land registry in Q1, the lowest level on record for a first quarter, and 10pc lower than the same time last year, all according to INE data and illustrated in the chart above.
The only quarters on record with lower mortgage foreclosures were in Q2 2020 during lockdown, and Q3 in 2022 and 2023, a period with low activity because of the August summer holidays.
To put the latest numbers in perspective, there were 19,000 mortgage foreclosures in Q1 2014, so the level of distress has declined by 83pc in a decade, despite the fact that interest rates (Euribor-12M) were around 0.5% in Q1 2014, compared to 3.6% in Q1 2024 (chart below).
For reasons including higher employment, tighter lending standards and healthier household finances,, Spanish mortgage borrowers are coping better with higher interest rates today than they did with lower rates in 2014, when Spain was still in an economic depression. It also means fewer distress opportunities for opportunistic buyers today.
On the other hand, a government-imposed moratorium on the eviction of “vulnerable” families introduced as part of a “social shield” during the pandemic might also have something to do with it. In which case lenders are picking up the tab for mortgage defaults, at least in part.
Furthermore, data from the General Council of the Judiciary (CgPJ) shows that total evictions including tenants in rental arrear as well as mortgage borrowers in default increased by 12.8pc in the first quarter after seven months of consecutive declines, suggesting that the good news might not last. Data from the CGPJ is more timely than INE data that is based on Land Registry documents, which can take several months to be inscribed and show up in the INE’s numbers.
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