The mortgage market in Extremadura: Is getting a mortgage now more difficult than before?
Sunday, May 21, 2023, 06:27
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Badajoz closed January scoring its best mark in the last ten years as far as mortgage constitution is concerned. In total there were 618 compared to the 370 signed in December -which is about 65% more than at the end of 2022- or the 562 of the same month of the previous year. In Cáceres, however, the increases are more moderate and, although activity has risen above 17% compared to January 2022, the data for the last quarter of the year do not suggest a clear trend.
Despite the fact that Extremadura ranked last March as the cheapest region to buy a second-hand home, the truth is that in the capitals of both Extremadura provinces the price increase is notable. In Badajoz (€1,553/m2) the year-on-year growth rate reached 11.15% while, in the case of Cáceres (€1,276/m2), prices have risen by 5.49% in the last year. However, at the provincial level the situation changes. According to the last sales price report from pisos.com, the value of the square meter on land in Cáceres has fallen by -2.53% in the last year, standing at €759/m2 in March. For its part, the Badajoz real estate market recorded a year-on-year rise of more than 3% last month to reach €834/m2.
The director of Estudios de pisos.com, Ferran Font, explains: "Prices will follow the path of growth, but in a moderate line as long as access to financing does not find stability." Is it now more difficult than before to get a mortgage? Does the increase in mortgage prices affect the purchase decision of future owners? In the case of Extremadura, the data still does not show a clear trend, but what is undeniable is that access to financing has become complicated and buyers act accordingly.
Fixed and more complicated mortgages to obtain
According to the latest survey carried out by pisos.com, 72.2% of Spaniards who are going to buy a house this year admit that they will take out a fixed mortgage, compared to 16.7% who opt for the variable and 11. 1% for the mixed. "The rate hikes applied by the European Central Bank mean that financing is no longer as cheap as before, but the entities are taking charge of reconfiguring the mortgage offer because they have to continue attracting customers: it is the key to their business», Font points out.
For their part, the results of the Survey on Bank Loans, published in October by the Bank of Spain, are conclusive when it comes to concluding that the criteria for granting loans were generally tightened in the third quarter of the year affecting, not only to the Spanish mortgage market, but to the entire euro zone. Added to this is the fact that the tightening has been even more pronounced in the segment of credit to households for house purchase, which, in practice, could be behind the slowdown in the number of operations in certain markets.
The document, published by the body in charge of supervising the Spanish banking system, points to the risks perceived by financial institutions and the increase in financing costs as some of the causes of this hardening. The greatest difficulties in accessing a mortgage would also be related, according to the survey, to uncertainty in labor matters, the worsening solvency of potential buyers and a lower risk tolerance on the part of financial institutions.
That same economic uncertainty that has motivated the tightening of the conditions for access to credit, would be behind the doubts of potential buyers and it is that, as Font explains: «We are facing inflation that, although it is moderating, has made the price much more expensive. the cost of living, while wages have stagnated, making it impossible to save”.
However, the study prepared by the real estate portal reveals other interesting data regarding the increase in the cost of financing. "60% of those who are not going to become owners of a property this year say that the increase in mortgage prices and the tightening of conditions have not conditioned their decision," admits the spokesman for the real estate portal. For Font, this is a revealing result, "since one of the reasons that are being used to justify the possible drop in sales this year is based on the consequences in the mortgage market that the ECB's change of position is having" .