Mortgages plummet in Spain due to credit restriction and cash payments

Mortgages plummet in Spain due to credit restriction and cash payments

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  • The signing of mortgage contracts has fallen by 31% in one year, but less than in the previous month, according to the INE.
  • From the Spanish Mortgage Association (AHE), they note that the offer has been restricted and is now limited to “very solvent clients”.
  • Fotocasa analysts point out “Not only are less mortgages granted, but they are granted for much less.
  • Analysts and economists consulted by this newspaper argue that the mortgage loan will begin to grow slowly in 2014.


The mortgage is the key to the owner of a home.

The signing of new mortgages in Spain has accumulated 41 consecutive months of falls in interannual installments. Only last month, this was a year at the National Institute of Statistics (INE). Not only are you signed up for smaller amounts of money.

Of the 14,856 homes mortgaged in September, a figure 5.5% lower than the amount of September 2012. “Not only less mortgages are granted, but also the date of the INE show once again that they are granted for much less money, “says Beatriz Toribio, head of Estudios de Fotocasa. In total, the bank has used 1,445 million euros to finance the acquisition of apartments, houses and apartments, 34.7% less than in the same month of the previous year.

The total number of mortgages was at 0.54%, the average interest rate stood at 4.31%, 4.7%, higher than that registered in the same month of 2012 ” , point out the FOtocasa technicians.

So much has fallen the Spanish mortgage market has fallen to pre-crisis levels. In the date of the Bank of Spain, the total amount was reduced in September by 4.5% compared to 2012. Households, as well, managed to de-borrow more than 40,000 million euros, the lowest level since February 2007 strangulation and the economic difficulties experienced by millions of the Spanish market, although it is not the only reason, as experts and analysts consulted by point out.

The credit tap, closed

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Not only families are in the process of reducing their debt; also the Spanish banking sector. This is the process of reduction of its credit grant. The macroeconomic environment and the euro crisis have also not helped to turn the tap on.

Sovereign debt registered as a result of the crisis of the euro and the norms approved by the international authorities (the new regulation of Basel III) and II) “together with the Spanish Mortgage Association (AHE) concludes.

Less solvent customers

On the supply side, entities have difficulties in giving more credit. Also on the demand side (the clients), high levels of unemployment and the fall of a large number of households. “From the AHE.”, Explained from the AHE, “The debt capacity of households was impaired by the decrease in their average net income”.

“Requirements from the mortgage company said”. Not only is there ever less demand for mortgage loans, but the conditions for accessing it are tougher. “As detailed from Fotocasa.”

The cost of financing has become more expensive for banks, which has increased credit spreads from 0.5% to 3%. , The Spanish Mortgage Association, with the current levels of unemployment and economic deterioration. mortgage delinquency in Spain exceeded the 5% barrier for the first time in September.

More cash payments

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The high cost of financing to acquire a home has reduced the signature of mortgages and also by the boom of cash payments, those that do not require any credit. “Nearly the same operations are closed in cash as with mortgages,” says Beatriz Toribio.

Several reasons explain the “drastic” increase in those who pay for their housing in cash, as José García Montalvo, economics professor, points out in an article published by the Savings Banks Foundation (Funcas): “First, the sharp reduction in the property In addition, banks have “adjusted their risk parameters”.

Another cause of the increase in payment in the hand comes from abroad. “Foreign buyers are back to the Spanish real estate sector,” says Professor García Montalvo, although he says that Along with foreigners, during the last few months, the arrival of investment funds has increased, interested in properties and promotions in the Spanish territory.

Slow recovery

When will the mortgage loans increase again? The industry is already normalizing during this year. “If the economy recovers we will see an opening of the tap from the next year, although the next few months will continue to be declines”, warn sources of the AHE.