Banks predict more expensive mortgages and rule out a bubble.

BarcelonaFor the four largest banks in Spain, 2025 has been a year of positive signs. In fact—with the exception of Banco Sabadell—CaixaBank, Banco Santander, and BBVA have once again posted record profits, mostly due to strong net interest margins and increased fee income. In total, the four institutions They add up to a historic benefit of 32.278 billion euros throughout the year. If the profits of Bankinter and Unicaja are added to that figure, the final figure is 34 billion euros.

Loans and mortgages have played a prominent role in the presentations of banking results for the year after increasing in all cases, and although the institutions rule out a bubble, banks are already beginning to predict that mortgages will become more expensive. In fact, according to the latest available data from the Bank of Spain, 2025 has been an extraordinary year in terms of mortgages granted by banking institutions, reaching a total volume of 82.752 billion euros, nearly 22% more than the previous year, when it was 67.951 billion.

December was a particularly strong month, during which €8.392 billion was lent, reaching levels last seen in 2010. These figures are now approaching the activity levels of 2008, just before the housing bubble burst, when lenders lent a total of €87 million.

Mortgage War

This exponential increase is largely due to the mortgage war that has already created an extremely competitive market in 2025: banks are seeking, through mortgage loans, to acquire new, creditworthy clients – the overall default rate has also decreased – and to retain them long-term. It is in this context that the average interest rate for new transactions has stabilized at around 2.6% since mid-year, far from the 2.9% of 2024 and the 3.75% of 2023, and well below the European average, which stands at around 3%. Banks, therefore, are beginning to pave the way for more expensive loans and are refusing to continue the mortgage war. In this regard, CaixaBank's CEO, Gonzalo Gortázar, pointed out during the presentation of results that mortgages will most likely start to become more expensive due to rising interest rates: "The average mortgage rate in the rest of Europe is around 3%, and we're at 2.5%, but long-term interest rates will rise, and it's normal for mortgage rates to follow suit." She added that it's important to keep in mind that "the evolution of the mortgage market is significant; before, almost 100% were variable-rate, and now more than half are fixed-rate." "The mortgage market is growing, not excessively, but our market share is around 25%, and therefore, we're not aggressively trying to take market share from others; we're simply defending our position, and we're doing well," Gortázar asserted.

Bankinter's CEO, Gloria Ortiz, also pointed out that He continues to see "irrationality" in the mortgage market and again ruled out entering into any kind of price war for home loans. In the presentation of the 2025 results, Ortiz denounced that "some entities are selling mortgages at 2% or 2.20% when the curveswap"The 30-year rate is currently around 3%." At these interest rates, "it's an unsustainable portfolio," added the Bankinter executive. BBVA was also emphatic in its rejection of the interest rate war. Its president, Carlos Torres, pointed out that "prices are attractive for us at BBVA," at around 2% in 2025. These figures contrast with the case of Santander, whose 2025 accounts showed a 17% growth in mortgage loans compared to the previous year. Fleeing the bubble

The sustained rise in housing prices and the fear of a new bubble after the 2008 crisis are keeping central banks on high alert. For example, the European Central Bank (ECB) announced at the end of January that it will launch a review of all institutions under its jurisdiction regarding mortgage lending criteria and pricing.

The goal of the institution headed by Christine Lagarde is to ensure that loans signed now do not lead to an increase in defaults in the future. In an official document, the institution sets as its objective "that banks establish and maintain sound credit criteria and risk-based pricing." Also, Bank of Spain This objective is proposed. At the end of 2025, it announced that it would begin working on imposing limits on mortgage lending with the aim of preventing a bubble resulting from rising housing prices.

In response, CaixaBank's CEO, Gonzalo Gortázar, dismisses the idea that the surge in housing prices and the mortgage war are causing a bubble, but remains open to new guidelines from central banks. "The current market is very different from the real estate bubble of 20 years ago; the weight of residential investment in GDP has halved, most mortgages are at a fixed rate, etc., and therefore we don't have a bubble that could worry banks' balance sheets," explains Gortázar. "As long as what [central banks] set is within a reasonable framework of indications of where the sector should be headed, we agree. The most important thing is to think these rules through carefully, and what I don't see is any short-term urgency because there isn't a bubble; the urgency lies in the creation of one," the CaixaBank executive stated. Along the same lines, BBVA CEO Onur Genç pointed out: "I wouldn't call it a bubble. Previously, there was housing construction that wasn't needed, and prices collapsed, but we don't see a risk of that happening again." Unicaja CEO Isidro Rubiales also doesn't believe that a mortgage bubble is occurring in Spain, but rather that there is an "excessively competitive" market which, given the lack of housing supply, is causing price pressures.

Banco Sabadell, which didn't dwell much on the mortgage issue during its results presentation—the last on the calendar for the major banks—reserved its comments on the matter for its president, Josep Oliu, during his traditional conference on economic prospects at the Sabadell Chamber of Commerce last week. Oliu criticized "the left-wing policies being implemented to try to solve the problem of the lack of affordable housing," which, he says, "in practice, exacerbate it." He believes that the "only solution" is "to increase supply." "If urban planning restrictions don't allow for profit, there won't be any developments," he asserted.

Be that as it may, everything points to banks beginning to rationalize mortgage rates in 2026, whether to avoid the mortgage war, due to pressure from regulators, or for survival.