Tuesday, September 28

The granting of mortgages continues to rise and is nearing its maximum in ten years

Far from stopping it, the pandemic has stimulated the purchase of real estate. “Demand is experiencing an unprecedented boom. Since we came out of the crisis in 2014 we have not seen similar figures,” says María Matos, director of studies for the real estate portal Fotocasa. The latest data on the granting of mortgages prove him right: in June 37,961 were signed throughout Spain, practically the highest figure in the last ten years and only surpassed by that of January 2020, when there were more than 40,200.

Although at the time of the bubble it was common to sign more than 100,000 mortgages a month, after the puncture they fell to a minimum. The market has been recovering little by little since then. Saving the pothole of confinement —when the visits to flats and the administrative procedures stopped—, in the last two years the monthly number of mortgages on housing has been increasing. This has caused, on the other hand, a slight rise in household debt.

Analysts attribute this to the good conditions of the banks which, in a context of low interest rates, concentrate their offer on very cheap fixed rate mortgages. “The banking sector has to compete with variable mortgages, which are governed by the Euribor. This is at a minimum and the forecast is that it will continue like this, so they are offering very low fixed rates,” continues Matos. “To those who ask for a mortgage now, it can be almost free.”

A logical consequence of this trend is that a high percentage of them are at a fixed rate: if ten years ago they barely represented 4%, today they are almost half.

“It is interesting that the fixed rate is consolidated,” adds Ferrán Font, director of studies at Pisos.com. “It is obvious, a somewhat hackneyed issue, but it means that banks want to offer this product. The conditions that exist now are very advantageous and we will continue to have them for at least two years, but it is not easy for them to be repeated in the future “. The average interest rate at which fixed mortgages are being signed is 2.81%, far from the peaks of the bubble, when it reached over 6%.

Who can buy a house now?

Getting a mortgage in good condition is easy. What is not so easy is to get a cheap house. The prices of new and used housing continue to rise throughout Spain. According to the latest data from the Tinsa appraisal company, housing has risen 20.7% from its minimum in 2015 and 2.9% since the start of the pandemic, in March 2020.

The areas in which it has increased the most this year are the islands and the Mediterranean coast, compared to capitals and large cities, where the increase is more moderate (0.4% in 2021). Being more expensive than their metropolitan areas, many provincial capitals lose weight on the total of sales. To give two examples: in Barcelona, ​​only 24% of the homes that were bought in the second quarter of the year were in the city, when in 2014 they accounted for 36%. In Madrid, the weight has fallen from 58% (2015) to 45%, according to the latest data from the College of Registrars.

The price increase is noticeable in the average amount of mortgages granted, which in June reached 140,000 euros. The data vary greatly by province: in Madrid, the average mortgage is 206,000 euros. In Barcelona, ​​180,000 euros. And at the other end of the scale are Cuenca, Cáceres and Ciudad Real, with average mortgages below 78,000 euros.

Despite the good financing conditions, most banks require 20% of the house price up front, a percentage that rises to 30% if we add the purchase and sale expenses. Who has the ability to access mortgages? The buyer’s profile varies, depending on those consulted and the data collected by the property registrars.

“I do not know what percentage of mortgages they represent but, as a result of the pandemic, the demand of the second home buyer has increased. Our data tells us that 93% of those who are looking already have one,” continues Matos, from Fotocasa. “We have never had so many citizens interested in moving houses as now. It is linked to teleworking: before the location requirement was the most important after the price, but now that has completely disappeared. People want natural light, terraces and gardens, so you go to the outskirts of cities, where those features are easier to find. ”

The surface of the houses that are bought increases (on average, 102 square meters), the sale of single-family houses rises and the sale of collective housing falls, although in perspective the apartments continue to represent 79% of the total purchases.

“Buyers are people who have prior capital. There will also be investors, precisely because of the good conditions of interest rates, which make investment in brick interesting,” adds Font. “Young people are the ones who suffer the most precariousness. And even those who have a correct salary do not have the capacity to save, so it is difficult for them to access the purchase.”

In this sense, the director of studies at Fotocasa highlights the Murcia initiative, which has become the first community in Spain to endorse that 20% entry that banks ask for buyers under 35 years of age. The Region announced in April that it would guarantee around 400 homes of up to 175,000 euros.

This measure is a copy of the British Help to Buy scheme, which Spain has been proposing for some time real estate developers and banks. Ana Botín proposed it in May of last year and the Government admitted, through the Ministry of Economy, to be studying it, although the Ministry of Transport later claimed to be focused on its “affordable rental plan.” Part of this plan depends on the future Housing Law, still stuck due to differences between PSOE and United We Can and which accumulates nine months of delay.