The mortgage firm advances 18% to avoid the rebound of the Euribor

Construction of houses in a neighborhood of Madrid. / R. C.

The value of homes heats up another 6.5% in April to 145,715 euros, according to the INE

Jose Maria Waiter

The real estate market is heating up as warnings about rising interest rates have intensified in recent weeks. Waiting for the European Central Bank (ECB) to raise the official price of money, predictably in July, mortgage operations are increasing precisely to avoid a rise in the Euribor, which has already returned to positive after more than six years below 0 %.

Buyers want to avoid paying more interest on their loans and therefore the mortgage firm has accelerated 18% in March compared to the same month last year to add 43,378 loans. This is the highest figure for a single month since February 2011, when Spain was going through the previous economic crisis after the real estate bubble of 2008, according to the INE. With the advance in March, which increases by more than three points that registered in February, the home mortgage firm has chained 13 months of consecutive year-on-year increases.

The revulsion that the real estate market is experiencing is not only seen in the mortgage signature but also in the amount of the same. Because this data reflects how the value of real estate is rising, despite the doubts generated by the current crisis derived from the war in Ukraine after the pandemic passed. The average amount of mortgages constituted on homes increased by 6.5% year-on-year in the third month of the year, to 145,715 euros, while the borrowed capital grew by 25.6%, to 6,320.8 million euros, its highest figure since February 2020, just before the coronavirus was declared.

All the analyzes indicate that the mortgage signing is accelerating due to the expectation of higher interest rates. In fact, in March the average rate applied to all home mortgage loans stood at 2.5%, with an average term of 25 years. A year ago, it was at 2.47%.

The Euribor will predictably close May at 0.26%, compared to 0% in which it closed in April. In just three months, the interbank indicator has increased practically one point, being at -0.5% at the end of 2021. In addition, expectations remain bullish (this Thursday it was trading at 0.35%) in the face of the next few months.

In addition, and given the fear of increases in the Euribor, less and less mortgages are signed at a variable rate. In March, 27.3% of the loans were constituted with this modality, which implies periodic revisions (annual or semi-annual) depending on how the rates evolve in the coming years. Its average rate is 2.15%. The remaining 73% are already at a fixed rate, maximum monthly registration. That is, with the same interest for the entire life of the mortgage. Although it must also be taken into account that this modality already applies an interest of 2.68%.

In any case, the Euribor is the rate to which the highest percentage of variable-rate mortgages refer, both before the change (65.8%) and after (42.4%).

On the other hand, last March a total of 16,991 mortgages changed their conditions, a figure 39.9% lower than that of the same month of 2021. Considering the type of change in the conditions, there were 13,934 novations (or modifications produced with the same financial entity), with an annual decrease of 41.4%.

The number of operations that changed entities (subrogations to the creditor) was 2,451, 30.7% less than in March 2021. For its part, in 606 mortgages the owner of the mortgaged asset changed (subrogations to the debtor), 36 .5% less than a year before.

Of the 16,991 mortgages with changes in their conditions, 24.4% are due to changes in interest rates. After the change in conditions, the percentage of fixed interest mortgages increased from 22.9% to 48.4%, while that of variable interest mortgages decreased from 75.8% to 48.9%.

By autonomous communities, those that registered the highest number of mortgages constituted on homes in March 2022 were Andalusia (8,966), Catalonia (7,545) and Madrid (7,308). Likewise, the regions in which the most capital was lent for the constitution of mortgages on homes were Madrid (1,604.5 million euros), Catalonia (1,245.8 million) and Andalusia (1,097.4 million).

In all communities, more mortgages on homes were signed in March than in the same month of 2021, except in Galicia, where they fell by 3.9%. The greatest increases occurred in La Rioja (+55.2%), Aragón (+51.4%), Canarias (+37.6%) and Baleares (+36.8%), and the most moderate were registered in Valencian Community (+2.6%) and Asturias (+3.9%).