2024-01-28 16:49:17
In a detailed analysis of the dynamics of the mortgage market in Spain, the most recent data from the Bank of Spain, supported by the information provided in the bulletin corresponding to the third quarter of the Spanish Mortgage Association (AHE), reveals a marked increase of 166% in mortgage renegotiations during the first eleven months of 2023 compared to the same period last year.
The AHE, by carefully examining the current market situation, has highlighted a particular phenomenon amid the apparent general atony of the sector: the notorious and “increasing increase” in loan renegotiations. This phenomenon, in turn, has translated into a significant decrease of 20% in the activity of new loans constituted on homes, while renegotiations have experienced a shocking increase, almost tripling their presence in the market.
This transformation in the mortgage landscape is reflected in figures provided by the AHE, indicating that renegotiations now represent 8.5% of new transactions, compared to the modest 3% they represented in the previous two years. This change has reached its peak in November, when renegotiations constituted 11% of new mortgage operations, with a total of 558 million euros in renegotiations in that month alone, 34.7% more than in October and an impressive 52.0% more than in November 2022.
Behind this phenomenon, the AHE points to the general rise in interest rates as the main driving force. This increase has favored the conversion of the variable to fixed mortgage modality, a change supported, in part, by the measures established in Royal Decree-Law 19/2022, which reduces or cancels the compensation costs associated with such modifications of the mortgages. contractual conditions.
Evolution of Mortgages by Interest Rate: Trends and Notable Changes
The AHE bulletin not only highlights the increase in mortgage renegotiations, but also delves into the evolution of mortgages according to the interest rate. An increasing trend is highlighted in the contracting of mixed mortgages, characterized by offering a fixed rate for a period of more than one year and less than ten years, followed by a variable rate.
In particular, the AHE highlights the notable increase registered in originations that establish an initial fixed rate between five and ten years. This category has experienced a significant increase in just a year and a half, going from 4% to 17% of all mortgage transactions. These two categories, along with those that make up an initial fixed rate for up to five years, have come to concentrate more than 40% of new hires until November 2023.
On the other hand, fixed mortgages, although they still represent 43% of new loans for home acquisition, have experienced a considerable reduction since June 2022. At that time, these modalities constituted 67% of new originations, evidencing a substantial change as the official interest rates of the European Central Bank (ECB) began to increase.
Monetary Normalization and its Impact on Variable Loans
The association emphasizes that the monetary normalization process has given continuity to the dynamics that were already occurring in variable loans. Although this category, characterized by rates that remain fixed for a maximum of one year, represented only 16% of subscriptions in November 2023, it continues to maintain a relevant weight in the portfolio of around 55% of the outstanding balance.
In this context of transformation and adaptation, the AHE points out the crucial role of regulatory measures, as well as the broader economic context, in shaping the new dynamics in the Spanish mortgage market.
Conclusions and Future Perspectives
This exhaustive analysis of the mortgage landscape in Spain during 2023 sheds light on a constantly changing scenario, where mortgage renegotiations emerge as unexpected protagonists in a market that is experiencing significant transformations. The substantial increase in these renegotiations, linked to the escalation of interest rates and regulatory measures, suggests a continuous adaptation of consumers and the financial sector to the conditions of the economic environment.
As the mortgage market evolves, with a notable shift towards mixed mortgages and a reduction in preferences for fixed mortgages, monetary normalization poses new challenges and opportunities. Caution and flexibility seem to be key in a scenario where stability and adaptability are essential.
In the immediate future, the evolution of interest rates and regulatory responses will continue to be critical factors that will influence the direction of the Spanish mortgage market. AHE’s continued role in monitoring these trends and providing detailed analysis will be essential for market participants to make informed decisions in an ever-changing environment.
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