2023-12-11 10:49:39
The Bank of Spain reports that the proportion of mortgages exceeding 62.2% of the value of the home is becoming less common, reaching its lowest level since the summer of 2015. This trend is due to increases in interest rates from 2022, which has led banks to be more cautious in granting mortgage loans.
Both appraisers and real estate agencies attribute this decrease to the increase in economic uncertainty and the increase in the cost of loans. Consequently, the number of loans that finance more than 80% of the value of homes has reached its lowest level in the historical series.
Banks are adopting a more selective stance when granting financing in order to reduce the risk of insolvency. According to the Spanish Banking Association, 60% of bank financing in Spain goes to families, of which 44% corresponds to mortgage loans.
The Bank of Spain establishes that the buyer of a home should not allocate more than 30% of their monthly income to paying the mortgage. However, currently, the volume of income that families allocate to purchasing a home is dangerously far from this recommended limit.
In addition, the average interest rate on new mortgage loans has increased significantly, leading to a greater theoretical effort to pay the mortgage. In the short term, it is expected that this proportion will continue to increase and that banks will be more demanding regarding the working conditions of clients when granting real estate loans.
In summary, the Bank of Spain reveals that it is less common for mortgages to exceed 62.2% of the value of the home, due to increases in interest rates. Appraisers and real estate agencies attribute this drop to the increase in economic uncertainty and the increase in the cost of loans. Banks are adopting a more cautious attitude in granting financing and an increase in the requirement of working conditions to obtain mortgage loans is expected.
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