The amount of mortgages signed in Spain has dropped
It was dropped from 20% (in 2007) during the housing bubble, up to 5% today.
Although there has been a small increase in recent months, according to an Economic Information Notebooks report there are no elements to think about a new real estate bubble being formed.
As this report explains, in a normal situation Spain should sign 10% of the mortgage loans of the entire eurozone. That is approximately double the current 5%.
This same report highlights that in recent months the granting of loans for mortgages in Spain has increased up to 10%.
It has also been analyzed that the interest rates of these mortgage loans have gone from being below average to being well above. While in Spain new mortgages are granted with interest rates of 2.02%, in the eurozone the average is 1.83%. Reverse trend to interest rates on mortgages granted in previous years.
These mortgage loans has gone from being below average to being well above. While in Spain new mortgages are granted with interest rates of 2.02%, in the eurozone the average is 1.83%. Reverse trend to interest rates on mortgages granted in previous years.
Why this increase in mortgage interest rates?
According to the author of the report, there are two hypotheses that have led to this increase in the interest rates of these loans:
- The instability generated by the Supreme Court, due to the current possibility of increasing costs for credit institutions for having to assume the taxes of the constitution of mortgages retroactively.
- Consequences of the legislative change the Government, which forces the entities to assume such a tax, although only for new mortgages.
- It should also be noted that while in Spain variable rate mortgages constitute 38% of the total, in other European countries such as Germany (11.5%) or France (2.2%) they represent much less percentage of the total.
I hope this clarifies a bit why the rise in the cost of mortgage loans in Spain.