The granting of mortgages resists economic uncertainty and the average loan reaches levels prior to 2008

The largest number of mortgages granted since 2012. The largest mobilization of borrowed money since 2011. The highest level of average mortgage since 2007. The mortgage market continues to set milestones that have not been seen in the past decade. The economic uncertainty that is projected due to inflation problems has not affected, to date, the loans that banks give for the purchase of a home. There are various data that show a business that continues to rise despite the change of third that the banks have ventured with the rise in interest rates, which will result in more expensive loans, and the commitment to the variable interest rate compared to the fixed one, breaking with atypical years in the sector.

INE data for the first half of this year show that more than 236,400 mortgages have been granted in Spain. It would be equivalent to 1,300 a day or 53 every hour. The record of these loans granted by the banking sector reaches levels not seen in Spain since 2012. The sector has experienced eight consecutive years of growth, with the exception of 2020 where the months of quarantine slightly slowed down the evolution. The first six months of this year experience a growth of 17% compared to last year, which was already very intense in the granting of loans. Gone are, yes, the data of the years of the bubble, when the banks granted almost three times more mortgages.

High inflation, which limits the purchasing power of households, and the rise in interest rates, which makes loans more expensive after years of cheap money, put the boom in the mortgage market in recent years in a bind. However, the INE statistics still do not show these effects on the mortgage market and point to a banking sector that is still very active in granting this type of loan. Although, the ECB rate hike did not take place until the end of the first semester and the effects of the change in the commercial policy of the banks with more expensive prices may still take a few months to be seen in the statistics.

Having made these remarks, households have continued to borrow during the first half of the year to purchase homes. This has led the banking sector to mobilize a volume of financing that has not been seen for many years. Between January and September, 342.7 billion euros have been granted by banks to families for the purchase of homes. It is more than doubling the levels seen a decade ago. You have to go back to 2010 to find a year in which those records were surpassed, the real estate bubble that devastated the brick and banking sectors just burst. The bank has lent between January and June 20% more money than they gave in the same period last year for the purchase of a home. "These data continue to reflect the good health of the Spanish real estate sector and also the wide availability of credit offered by the financial system despite the environment of high uncertainty generated by the war in Ukraine and the return of inflation", pointed out the service of Ibercaja analysis.

There are other data that confirm the acceleration of the mortgage sector in Spain. This same entity alluded in its conclusions on the INE statistics to those prepared by the Bank of Spain on the outstanding balance of mortgages. This concept refers to how much households owe in loans for the purchase of a home. After the financial crisis, there has been more than a decade in which, as there were more repayments than new mortgages, this figure has not stopped falling. Until now. In June, this amount grew by 1.3% year-on-year, confirming a change in the cycle in which households once again increased their mortgage debt.

With the rise in the number of mortgages and the growth in the amount borrowed to buy homes, the average amount of these loans is increasing year after year. It is this figure that is closest to the levels prior to the financial crisis of 2008. In the first half of the year, the average mortgage stood at 145,000 euros. It is a 5% increase in just one year, showing that banks have opened their hand in granting these loans after being limited in the past. In fact, you have to go back to before 2008, when the bursting of the bubble was just a warning, to find a level higher than the current one. It has increased 40% from a decade ago.

Although the upward trend continues, in the banking sector there are those who speak of "uncertainty" to see how the rise in interest rates will affect mortgage activity. "The outlook is uncertain, the volume of housing and mortgage sales seems to have exceeded its long-term potential due to the boost in demand accumulated during the pandemic and changes in preferences," they point out from Ibercaja. This would mean a "moderation" in the future. Companies in the sector such as Pisos.com also speak of this slower growth and point out that it can even be seen in the June data, although the trend continues to be upward.

Some effects of the change in the trend of the Euribor and interest rates are already being seen in the commercial policy of banks. Since March, banks have begun to promote offers of variable-rate mortgages versus fixed-rate ones. Even then, an increase in rates was forecast after having touched its minimum at the end of last year and, especially, after the beginning of the invasion of Ukraine by Russia. Bankinter or BBVA were the first to launch a change in their commercial commitment, encouraging the variable rate. This was the end of more than five years in which the banks had turned their traditional business upside down, in which the fixed rate was practically residual.

The fall in interest rates and, therefore, in the cost of mortgages, encouraged banks to turn to the fixed rate and focused their offers on this alternative. This led to the fact that in a matter of five years they went from assuming just 5% of the business to three quarters of it. The rise in rates is called to turn this evolution around, with an activity in which practically all banks already encourage their clients to contract variable again. As of June, this change in trend has not yet been seen in the statistics on mortgage contracting. Although, a brake on the growth of the fixed rate is intuited. In June they accounted for 2.3 points less than the maximum, reached in April.

Despite the advance that the fixed rate has had in recent years, Spain continues to be a country in which households are eminently indebted depending on the Euribor. According to data from the Spanish Mortgage Association (AHE), made up of the main banks in the country, 75% of the mortgaged debt is at a variable rate. These are the loans that will be most vulnerable to the rise in the Euribor that is appreciating throughout the year and that this Monday stood at 1.6%, the highest level since 2012, which contrasts with the negative data from a little over half a year ago. These increases increase the costs of its debt, in the midst of an inflation crisis that cuts its purchasing power due to the rise in prices.

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