Mortgages and Real Estate: New Trends in the Spanish Market

In the changing landscape of the Spanish real estate market, the granting of mortgages is on a downward trend, while home sales and purchases are experiencing a notable slowdown. This phenomenon is not attributable to the slowdown of the Spanish economy per se, but rather to the significant interest rate hikes implemented by the European Central Bank (ECB) over the last year, raising the cost of money to 4%. Christine Lagarde, president of the ECB, has recently hinted at the possibility of another rate hike at the end of the month at the next ECB meeting.

According to recent data from the National Statistics Institute (INE), the number of mortgages taken out on homes in April fell by 18.3% compared to the same month last year, recording 27,053 loans, the lowest figure since December 2020. This decline marks the third consecutive month of negative rates in home mortgage signings, following the trend of previous months.

In addition, the average amount of residential mortgages decreased by 4.1% year-on-year in April, standing at 136,945 euros, while the capital loaned decreased by 21.6%, reaching 3,704.7 million euros. This slowdown in the granting of mortgages is a reflection of the increase in the cost of supply and the tightening of credit by banks.

However, there are groups that remain in an advantageous position with respect to financial institutions when it comes to taking out a mortgage. Civil servants, with the exception of the police and the military because of the risks associated with their professions, are the group preferred by banks due to the stability of their employment and the security in the continuity of income that allows them to afford the monthly installments. Likewise, employees of public companies enjoy favorable conditions for obtaining mortgages.

Other beneficiary groups include those under 35 years of age, who can access guarantees from the Official Credit Institute (ICO) and incentives from the Community of Madrid, among others. In addition, financial institutions offer more attractive conditions such as a higher percentage of financing, recommended by the Bank of Spain at 80%, extended repayment terms beyond 30 years, reduced interest rates and, in some cases, exemptions from transfer tax (ITP) provided by certain autonomous communities.

In short, banks tend to prioritize those citizens with savings, wealth, economic solvency and job stability, putting more obstacles in the way of older people or those with less stable incomes.

For those interested in delving deeper into the real estate world and learning more about current and future trends, we invite you to visit, where you will find a wide range of news and detailed analysis of the sector.