Residential lending in Spain 2023


Spanish home loans October 2023

Residential lending in Spain made up over 70% of all new credit issued in the month of October 2023.

For the first time in a few months residential lending in Spain for purchase of homes exceeded 60%. Of all new borrowing contracts.

Average Spanish loan sizes were 140.6k. Which was a reduction on previous month. Also well below the 148k of last year.

Spanish residential property

New Residential Mortgages in Spain

In total 31.921 new Spanish mortgages were constituted. This was a small increase on September 2023. However down 22.3% on same month of 2022.

Capital lent due to increase in numbers was up 0.9% on last month. However due significantly lower loan sizes and numbers over 2022 a reduction of 26.4%.

Year to date the small increase of October 2023 made little difference to the annual decline.

In total the number of residential Mortgages in Spain is down 17.7%. The capital lent reduced by 19.4% and average loan sizes down 2.1%.

Nothing in the last quarters activity suggests this will change before the end of the year.

Spanish Mortgage in Spain interest rates

The 12 month Euribor remains above 4%. This means that variable rate lending is high. On average for non resident lending in Spain a mortgage in Spain applicant can expect a margin of 1.5%. For Spanish Nationals this may be closer to 0.75% to 1%. These lower margins however will come at lower loan to values. Equally with many linked products.

Total initial rates are therefore in region of 5.5%.

There are some signs that this may reduce during 2024. The Euribor in December fell marginally. Spanish interest rates may have peaked.

Residential lending Spain is fixed or variable rates the best option

Fixed rates as a mortgage product type in Spain, can still be achieved from 3.75%. With the average fixed rate between 4% to 4.25%. This is for a 20 year term. It is difficult to predict the longer term. However over a 20 year period a rate fixed at 4% appears to be good value.

There is a generation used to negative rates. However 20 years ago a fixed rate of 4.75% was considered low. Therefore home loan rates averaging between 4 to 5% may be a more realistic view of how things will look in the medium term.

Electing for fixed rates for mortgages in Spain. Where a borrower going through the application process can achieve it removes a double risk. A non resident borrower in Spain often has 2 risks. Rate increases and currency fluctuations. Removing one factor provides more stability of ongoing cost.

Regional performance

In the month the region of Andalucía bucked the trend. Increasing by 12.4% over September 2023. Cataluña also. The Canaries was up 63.8% on the month. Was also one of very few regions exceeding October 2022.

Madrid has been hard hit by the downturn decreasing by 35% over same month of last year. Down 38% year on year.

In general Spanish property sales are down.

Spanish Banks

Spanish Banks experienced yet another month of decreasing loan books. 36.694 Spanish Mortgages were cancelled or redeemed. Foreclosure activity remains low.

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