Mortgage signings hit a new record in July

BarcelonaNonstop. Mortgage issuances again set records in July. In Catalonia, a total of 8,406 transactions were closed, representing a 25.7% increase compared to the previous year, according to data released this Thursday by the National Institute of Statistics (INE). A total of €1,589.85 million in mortgages for home purchases were lent, 40.7% more than a year ago and 22% more than the previous month.

Across the country, 45,067 mortgages were signed, the highest figure for a month of July since 2010 and 25% higher than the same month last year. This represents a total of 13 months of increases. The average loan amount for home purchases amounted to €163,307, an increase of 7.6%. By autonomous community, the largest increases were seen in Aragon (79.72%), La Rioja (45%), and the Canary Islands (43.4%).

For mortgages on residential properties, the average interest rate was 2.94%, down from 2.99% in June and 3.25% a year ago. The average term was 25 years. The reduction in interest paid by customers is in line, as expected, with the cut in base interest rates implemented by the European Central Bank (ECB) over the last year, which has pushed down the Euribor, the reference rate for bank loans in the eurozone.

29.9% of loans were variable-rate, which essentially uses the one-year Euribor as a reference, and 70.01% were fixed-rate. This trend is combined with a supply that cannot meet existing demand, which is pushing up house prices. In fact, the increase in mortgage signings occurs in a context of lower interest rates, which makes access to financing for home purchases more affordable, and a perpetual imbalance between supply and demand.

The total number of mortgages with changes in terms registered in the property registries fell by 2% in July compared to the same period last year. Novations (or modifications with the financial institution itself) decreased by 12.6%, and subrogations to the creditor (change of entity) by 41%. In contrast, subrogations to the debtor (change of loan holder) increased by 89.1%. 77.6% of the 13,286 mortgages with changes in terms were due to changes in interest rates.

The purchase and sale market is growing in Barcelona compared to Madrid.

The data shows that the housing market in Barcelona is becoming more comparable to that of Madrid, which has traditionally been larger. In 2009, for every 100 apartments sold in the Catalan capital, around 180 were sold in the Spanish capital, a ratio that has now fallen. This year, for every 100 apartments sold in Barcelona, ​​110 were sold in Madrid, according to data from the Barcelona Chamber of Urban Property. "They are two parallel markets, but with different housing policies," notes Òscar Gorgues, manager of the Chamber of Urban Property.

In his opinion, this increase in Catalonia is essentially due to a "transfer" of housing from the rental market to the sales market caused by Catalan legislation on rentals. According to the manager of the Chamber of Property, the housing policy currently in effect in Catalonia, in addition to imposing price limits, makes it difficult for owners who renovate apartments to update rental prices, so they prefer to put them up for sale. Gorgues also points to the "legal uncertainty" that, in his opinion, makes it difficult to evict tenants who don't pay rent.

This context has added tension to the rental market and has increased sales, both because more owners of rental apartments are now choosing to sell them and because the "scarcity" of supply is pushing many tenants to end up purchasing a home. This fact, says Gorgues, explains why the average mortgage amount granted is higher, as there has been an increase in the price of apartments and an influx of new buyers. Many of them previously rented and, therefore, have fewer savings, so they must borrow a larger proportion of money from the bank compared to the price of the house. However, the banks' mortgage policy means the Chamber of Urban Property rules out any "risk of a financial bubble" similar to that of the early 2000s, the institution's manager added.