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The Average Mortgage Amount on Homes Increases
The average amount for mortgages on homes (with an average term of 24 years) rose by 5.3% year-on-year in the eighth month of the year, reaching €145,352. The total capital lent also increased by 14.6%, totaling €4.4588 billion, along with the average interest rate, which Statistics confirmed rose to 3.30% from 3.17% in the previous month, reaching its highest level since last April (3.38%). The average rate for buying a home is slightly higher than a year ago (3.24%) and has been above 3% for 17 consecutive months.
Juan Villén, General Director of idealista/hipotecas, believes that the data on property sales and mortgages registered in August “continue the recovery trend from
July, although slightly tempered by the traditionally lower activity in this month.” He is optimistic that “this recovery will continue in the coming months.”
Regarding the increase in the average interest rate, Villén believes it to be a “temporary fluctuation, as both the trend of rate reduction and the banks’ increased competitiveness in the second half of the year should translate into cheaper mortgages,” in light of the downward path of the European Central Bank.
María Matos, Head of Research and spokesperson for Fotocasa, shares a similar view on the data: “They show a strong latent interest in acquiring property in our country […] and indicate the start of a period of prosperity in the mortgage market,” due to the rate reduction that is attracting more credit applicants who either couldn’t previously afford the costs or postponed their search awaiting better conditions.
Matos also expects further growth in recovery: “The forecasted trend is that, after stabilization in the first half of the year, activity will increase in the second half, driven by improved mortgage conditions and housing purchase guarantees,” she emphasizes. In fact, she does not rule out that 2024 could become one of the best years for home purchases since 2007.
The other side of the mortgage market’s resurgence is the growing tension between supply and demand. While more potential homebuyers are expected, the available housing stock remains low for current demand levels and is unlikely to balance the market. “Probably, the rate reduction will indirectly lead to a new increase in home prices by attracting more buying demand to the market,” Matos adds.