The mortgage business continues to rise despite the rise in rates


The composition of residential loans is up 9.3% through November, with a decrease in the fixed modality and an overall increase in interest rates

Despite the interest rate hike initiated by the European Central Bank (ECB) this summer, the mortgage market still shows no signs of weakness. Homebuyers are unaffected by the rise in Euribor for now, with a 9.3% increase in mortgage build-up to last November, four months after interest rates began to rise sharply, according to data from INE.

In the last part of the year, and in the absence of data for December, all parameters related to mortgages increased: the average amount borrowed amounted to 147,673 euros, with an increase of 5.8%, closely linked to the increase in the real estate market prices. On the other hand, the number of years that are signed to repay the mortgage is also growing, exceeding 25 years for the first time.

In addition, the interest payable for these new mortgages continues to rise, strongly conditioned by the rise in the Euribor. Indeed, of the 39,304 loans issued in November, a third (34.6%) again had a floating interest rate (i.e. with repayment terms that will change depending on the Euribor), compared to the 20% that were granted in a few months of 2022. The banking campaign to re-market this type of mortgage is noted in the statistics, to the detriment of fixed rate mortgages, 65% of the total. They still make up the majority of new mortgages, but that percentage is falling over the months.

In total, the average interest rate for new mortgages has risen to 2.55%. In the case of fixed rate loans, it is 2.8%, and in the case of variable rate loans, it is more than 2.1%.

Also noteworthy are the changes in mortgages that continue to be recorded after the government allowed a variable rate loan to be transferred to another at a fixed rate to avoid market fluctuations, at no additional cost to the customer.

The total number of registered mortgages with changed conditions in the housing administration is 10,760, 47.7% less than in November 2021.

Taking into account the type of change in terms, there were 8,839 novations (or changes made to the same financial entity) in November, with an annual decline of 49.0%. For its part, the number of operations where the entity changed (subrogation to the creditor) decreased by 39.3% and the number of mortgages where the owner of the mortgaged asset changed (subrogation to the debtor) decreased by 44.6%.

Source: La Verdad


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