The rise in credit is becoming increasingly noticeable in the real estate sector. The granting of mortgages for the purchase of housing deepened its fall in May. In total, 33,398 loans of this type were registered, which means a decrease of 24% compared to a year ago. The average amount of loans was also reduced, with 141,798 euros, and a fall of 4.6%, while the average interest rate in new mortgages it has shot up to 3.15%, 1.34 points more than in the same month of 2022, according to data from the National Institute of Statistics (INE).
With the year-on-year decline in May, the home mortgage firm chains four months of negative rates after the 2% drop recorded in February, the 15.7% drop in March and the 18.3% drop in April. Compared to the previous month, however, an increase of 23.5% was recorded, although it is less than the 32.7% of a year ago.
After the escalation of interest rates agreed by the European Central Bank (ECB) to contain inflation, the average interest rate for all mortgage loans stood at 3.5% in May, with an average term of 23 years. In the case of homes, the average interest was 3.15%, with a rise of 1.34 points compared to the same month of 2022 and with an average term of 25 years. The total capital lent for these purposes, 4,735.8 million euros, experienced a decrease of 27.5%, according to INE data.
Variable rate mortgages continue to rise
In this context, variable rate mortgages continue to gain ground And they already account for 38% of new loans, compared to 62% of fixed interest loans, which reached their ceiling a year ago, accounting for three out of four. The starting interest on variable-rate mortgages stands at an average of 2.79%, while that of fixed-rate mortgages is 3.40%. In any case, the product that is having the most success is mixed mortgages, in which a first period of up to 10 years is at a fixed rate and the rest is variable. The part in which the interest weighs the most is the first third of the duration of the loan.
The Communities with the highest number of mortgages constituted on homes in May were Andalucía (7,111), Catalunya (5,759) and the Community of Madrid (5,078). The autonomies in which more capital is lent for the constitution of mortgages on homes are Comunidad de Madrid (1,080.8 million euros), Catalunya (922.8 million) and Andalusia (840.5 million). The communities with the highest annual variation rates in the capital lent are Principado de Asturias (11.8%) and Cantabria (7.2%).
At present, the one year euribor, which is the main reference for variable interest mortgages, remains at around 4.1%, pending the decision of the European Central Bank (ECB) on Thursday of next week. It is taken for granted that the monetary authority will once again approve a rise in interest rates to combat inflation.
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The latest data on prices in the euro area, with a certain moderation to 5.5% but with an increase in the underlying rate, the most structural, which excludes the most volatile elements such as energy and unprocessed food, added two tenths more, up to 5.5%.
This evolution, especially that of more structural inflation, gives the ECB new arguments to continue raising the price of money, since July of last year it has gone from zero to 4%. In any case, there is a debate within the ECB about the need to continue raising the price of money or not, since an excessive increase could paralyze economic activity. For now, it is already slowing down the real estate market.