Several banks have announced that they will tighten mortgage conditions throughout 2026. Prices will rise, and lending standards will be stricter. This shift comes after a record-breaking 2025. The official explanation cites prudence and the need to avoid future risks in the real estate market.
I don't believe it.
The Spanish mortgage market shows no signs of a bubble. There is no uncontrolled credit growth or excessive household debt. What exists is a persistent lack of housing supply, a well-known and recurring problem for years. Prices are rising because not enough is being built, not because banks are fueling reckless lending.
The tightening of mortgage terms stems from another reason. Mortgages have ceased to be an attractive product for banks. Terms of 25 or 30 years, narrow margins, high capital consumption, and increasingly less attractive returns compared to other balance sheet items. For years, it was a strategic customer acquisition tool. Today, it occupies a secondary position.
Banks have far more profitable alternatives. Consumer credit is growing strongly and offers significantly higher margins. Business financing is regaining ground, driven by investment in digitalization, the energy transition, and industrial restructuring. These are shorter-term loans with higher turnover and a better return on equity. The banking logic is clear: allocate resources where the return is highest.
Added to this change is another relevant factor: increasing public intervention. The debate over regulatory limits, price controls, and restricted uses introduces uncertainty. The mortgage market is beginning to cease being a completely free market. And banks, perceiving that their business is becoming increasingly subject to political constraints and regulatory changes, tend to reduce their exposure. It's pure risk management.
The combination is clear: lower profitability, higher capital consumption, and an increasingly pervasive regulatory environment. The result is an orderly retreat, cloaked in a discourse of prudence that sounds good but doesn't explain the underlying reasons for the decision.
The banking sector is doing what all companies do when their environment changes: prioritizing the most profitable businesses and reducing those that are no longer profitable. It's a rational decision. But it makes a good impression to present this move as a response to a bubble that doesn't exist.
The problem is that this adjustment doesn't resolve the main imbalance in the housing market. Tightening credit doesn't create supply. It only makes access more expensive and shifts the pressure onto the buyer. The shortage remains unchanged.
