Spain | Mortgage rates decrease by 10% at the start of the year, reaching nearly decade-high interest levels

Spain’s Mortgage Market: Despite Rising Interest Rates, Demand for Housing Stays High

The mortgage market in Spain has experienced a 10% decline compared to January 2024, with a total of 33,128 loans granted in the first month of the year. According to data from the National Institute of Statistics (INE), this is the fifth consecutive year-on-year drop in mortgages for homes.

The average interest rate for home mortgages has been steadily rising and is now at 3.46%, its highest figure since December 2014. This increase in interest rates has been attributed to the rate policy adopted by the European Central Bank (ECB) to combat inflation and the Euribor’s evolution.

Despite this increase, only about 42% of mortgages in Spain were taken out at a variable rate in January, while 58.2% were fixed-rate mortgages. The general secretary of the Association of Builders Promoters of Spain noted that there has been a trend towards moderation in mortgage financing due to rising financing costs.

In terms of inter-monthly rates, home mortgages increased by close to 33% from December 2024 to January 2025, while the loaned capital increased by 30.7%. However, it’s worth noting that there was also an increase in mortgage changes within property records which decreased by almost 6% year-on-year. Modifications within the same institution and changes in ownership both decreased, while entity changes grew.

The autonomous communities with the highest number of home mortgages in January were Madrid, Andalusia, and Catalonia. However, there were notable declines in Asturias, Navarra, Cantabria and Andalusia, with increases seen in Madrid and Aragon respectively. Furthermore, experts predict that 2025 will be a year of changing mortgage interest rates as access to housing improves as conditions for mortgage credit ease further leading to a new mortgage war between financial institutions increasing competition and possibly even returning fixed mortgages back into the market.

Overall it seems that despite rising interest rates and financing costs there are still more people looking for properties but it’s important for them

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