The number of mortgages taken out on homes in Catalonia rose 44% in March compared to the same month last year (a 44.5% increase across Spain), reaching a total of 7,503 transactions in the Principality, marking ten consecutive months of growth. Compared to the previous month, the increase in this type of transaction was 2.3%, according to data published by the National Statistics Institute (INE). €1,317.7 million in home mortgages were lent in Catalonia in March, representing 66.04% more capital lent than a year earlier, and, compared to the previous month, the capital lent to take out mortgages increased by 2.2%. The average amount per mortgage was €175,623, 15.3% more than in March 2024, but remained stable compared to February (-0.1%). For residential mortgages, the average interest rate was 2.97% and the average term was 25 years. 33.2% of residential mortgages were variable-rate, and 66.8% were fixed-rate.
The Bank of Spain detects overvaluation of housing prices
The entity links it to the increase in demand for mortgage credit and a "more rigid" supply in the residential market.
Indicators of imbalances linked to real housing prices grew in 2024, which means that real estate overvaluation has increased. This is one of the conclusions drawn from the latest Financial Stability Report Prepared twice a year, in spring and winter, by the Bank of Spain (BdE). The institution now led by former Socialist minister José Luis Escrivá points out that the increase in demand for mortgage loans and a more "rigid" supply in the residential market is what has led to this scenario of rising housing prices. Despite posing a risk, the entity still views it with caution: "The [indicators of] imbalances have grown, but remain at moderate levels," noted the Director General of Financial Stability, Daniel Pérez Cid, during the informative presentation of the document this Tuesday.
As stated in the report, according to estimates prepared by the Bank of Spain, the average housing price in Spain was expected to be above its long-term equilibrium level at the end of 2024. Specifically, according to various analysis models, this imbalance stood at between 1.1% and 8.5% at the end of last year, a range well above what the Bank of Spain had detected just six months earlier, in mid-2024: between 0.8% and 4.8%. In any case, these estimates leave out social issues such as difficulties in accessing housing or wealth disparities.
More mortgage credit
However, new mortgage lending continued to grow in 2024, coinciding with the European Central Bank's lowering of interest rates and, therefore, with improved financial conditions. "This increase in lending has occurred in a context of strong growth in transactions (purchases) and real prices in the housing market," the Bank of Spain reiterates.
This may lead one to recall the years of the real estate boom., When mortgage lending was also skyrocketing, this comes at a time when "household income is trending favorably," not only due to the strong performance of the labor market, but also because some of the savings accumulated since the pandemic are being maintained, and "interest rates are contained," both of which leave housing prices at "moderate."
"The conditions under which new mortgage loans are being granted do not currently show signs of any relaxation in lending standards [by financial institutions]," the Bank of Spain adds in its report. This is 0% year-on-year, while the flow of credit for new operations increased by 34.6%, according to the report published Tuesday.