2023-05-12 06:48:56
The last meeting of the leadership of the European Central Bank (ECB) ended like the previous one. Without clearly expressing in the official statement a new increase in the price of money at the next summit, as was customary, although the notice from its president suggests that monetary policy will remain the same until inflation is short-circuited.
“We have all agreed that it was necessary to raise rates, that we are not pausing, that is very clear, and that we know we have more ground to cover.”, explained Christine Lagarde in her appearance to explain the rise of another quarter point, the lowest percentage in the seven upward revisions that the agency has carried out in less than a year. The main rate already reaches 3.75%, levels already exceeded last month by the Euribor –the reference indicator for variable mortgages is currently trading above 3.8%–, anticipating the script foreseen by the ECB. While Lagarde insists that interest rates “are not restrictive enough” yet, the demand for financing has slowed down and credit for home purchases has become more expensive without respite.
Between January and March, 109,406 mortgages for apartments and houses were formalized in Spain, 2.4% less that between October and December. It is the third consecutive quarter of decline in operations. “The increase in interest rates is causing a reduction in mortgage activity, giving rise to this downward trend, although there is still a relatively significant mortgage activity from a retrospective point of view,” says the College of Registrars of Spain in its report market published yesterday.
The decrease in Galicia was 5.1%, double the state average, up to a total of 3,517 loans less than in the previous quarter. Mortgages also fell sharply in the Balearic Islands (14.1% decrease), La Rioja (12.35) and Madrid (9.3%). Among the territories that endure without red numbers, Castilla-La Mancha (21.8% more), Navarra (15%) and Murcia (8.3%) stand out. The signing of loans for the acquisition of housing remains afloat in the accumulated of the last twelve months in practically all the communities. In the case of Galicia, there are about 15,500 loans and a year-on-year variation of 5.8%, but the Registrars’ forecast is “continuity” in the fall that began in the middle of last 2022.
Yeah seems to break the trend of indebtedness. On average, mortgages were around 141,446 euros in the first three months of this year after a 4.1% cut due to lower housing prices, but also because the average area fell. It is, according to the agency, “the first of the numerous decreases that are expected to occur over the coming quarters” given the also more than possible drop in property prices and their size. Galicia is one of the very few exceptions in the reduction of the mortgage amount. It reached 112,359 euros, 0.4% more than in the last quarter of last year; and the annual rate was 4%, around 111,800 euros per loan.
The community quickly says goodbye to the historical lows in interest. The average rate applied to mortgages in Galicia is close to 3.2%. It is the first time in eight years, since the start of 2015, that they exceed the 3% threshold. In just one quarter they increased by 45 basis points and around one point compared to a year ago. In fixed mortgages (78% of the total in autonomy) the average rate reaches 3.3% and 2.80% in variables. Throughout Spain, the rates applied to new housing loans reached 3.09%. “Despite the increase, it can still be considered a moderate amount based on the evolution that the Euribor has been showing, with a continuation of the intensely upward trend being foreseeable”, indicate the Registrars, “thereby causing an unfavorable impact on the evolution in the number of home sales”.
Between the slight fattening of the indebtedness and the pressure of the types, the monthly installment of loans in Galicia increased by 5.3% in just three months. They are just over 560 euros, about 100 euros more than at this point in 2022. The receipt eats up about 30% of the salary, the limit that experts consider excessive. The national data already jumps that barrier. It touches 32% with a monthly mortgage payment of 683.5 euros, 1.7% more than in December. The duration, on the other hand, is maintained: 23.92 years in Galicia of the established repayment term and 24.67 throughout the State.
The mortgage business is noticing the rise in rates more than the real estate market in general. After the fall of almost 11% in sales during the last quarter of 2022, between January and March they increased by 7.2%, still showing “remarkable strength”. This was not the case in Galicia, where they fell by 3.3%. 5,088 homes were sold. Two out of every ten were single-family, which is holding up slightly (0.1%).
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