The mortgage market is advancing timidly in its recovery, although it is not free from fluctuations. According to the latest mortgage data published by the National Institute of Statistics (INE), corresponding to the month of May, the signing of mortgages has returned to negative numbers after seeing some light in April. While in the fourth month of the year operations increased by 28%, recording the best April in 14 years (34,264 mortgages), May’s figures (27,435) decreased by 18.2%. Andalusia (5,496), Madrid (5,494), and Catalonia (5,241) were the regions that registered the highest number of mortgages constituted on homes in May this year.
Meanwhile, home sales have experienced a 21.5% drop, awaiting new interest rate cuts. May closed with 44,013 transactions, and April ended with 53,091, the second-best figure of the year. These numbers highlight the difficulties of accessing housing, with increasingly less availability for sale and very demanding financing conditions.
Meanwhile, the European Central Bank (ECB) has just announced that it will keep interest rates stable at the current 4.25%, and it won’t be until September when they will reconsider the decision to make cuts. Many prospective homeowners are closely monitoring the evolution of the reference index to jump into buying a home and applying for a mortgage. The reduction in interest rates will be key to the recovery of the mortgage market in 2024.
Profile of mortgage loan applicants
But who is signing mortgages in Spain? According to a recent study conducted by the General Council of Notaries, on the occasion of the fifth anniversary of the Law Regulating Real Estate Credit Contracts (LCCI), the age range in which most mortgages are contracted in Spain is between 35 and 44 years (33.4% of the total). This is followed by the group aged between 45 and 54 years, with 29.6%, and between 25 and 34 years, with 20.9%.
The conclusions of this analysis also indicate that in the first quarter of the year, 51.8% of future mortgage loan applicants were men and 48.2% were women. In 53.9% of the cases, mortgages were applied for by two people.
Additionally, 89.7% of the signatories of notarial transparency acts prior to the mortgages were of national origin, compared to 10.3% of foreigners. In this case, the 2023 annual mortgage market report from Idealista reveals that the foreigners who signed the most mortgages in 2023 were the British, with 15.5% of the total, followed by Germans (14.1%) and Swiss (9%). It is noteworthy that the conditions for non-resident mortgages are more restrictive than for nationals, as they cover between 70% and 60% of the property’s appraisal value, instead of 80%.
The effort to buy a home is increasing
Nowadays, accessing a home in Spain requires much more effort than it did several decades ago. An effort that has skyrocketed in recent years, to the point that Spaniards are dedicating the entire salary of 6.7 years (81 months) to paying off the mortgage, according to the study “Relation of Salaries and Home Purchase in 2023,” conducted by Fotocasa and InfoJobs. The Balearic Islands is the region where the highest gross salary is dedicated to paying for a property (12 years). Residents of Ciudad Real, on the other hand, allocate 2.8 years.
