Mortgages for home purchases plummet 29.6% in September

There have already been eight consecutive months of falls in the number of mortgages and the trend is accentuated, since the decrease in September has been greater than that registered in August (-22.7%). Due to this collapse in mortgages granted, the total volume of loaned capital fell by 29.7% in September to 4,446 million euros, although the average amount of mortgages remains around 143,000 euros (it only fell by 0 .1% and stood at 143,186 euros).

The reasons for this contraction in mortgage contracts are found in the sharp rise in rates and economic uncertainty. Due to the policy of raising interest rates of the European Central Bank (ECB) to try to contain inflation, the average interest rate for all mortgage loans stood at 3.42% in September, with an average term of 23 years. In the case of homes, the average interest was 3.26%, its highest value since February 2016, with an average term of 24 years. Compared to a year earlier, the average interest rate for home loans has increased by 1.26 points. It is the sixth consecutive month in which the interest rate exceeds 3%.

As rates are cheaper in the long term than in the short term, the tendency to take out mixed mortgages continues (the first years at a fixed rate and the rest at a variable rate), to the detriment of fixed mortgages. In any case, since last year starting in the summer – which is when the rate increase by the ECB began – the contracting of mortgages began to fall, it is likely that the collapse will ease at the end of the year because there will no longer be as much step effect.

Cooling

The director of Pilos.com Studies, Ferran Font, points out that “as was already seen in the sales statistics, the cooling of the sector is an obvious reality. A drop that occurs more prominently in credits granted than in transactions, although today it is not being perceived in prices. The coming months will be marked by the development of the Housing Law and the powers demonstrated by the new Ministry of Housing and Urban Agenda, as well as the ECB’s rate policy, which has interest rates as the main tool in the fight against inflation.

One of the best news is that the pace of rise in mortgage rates is reducing and that we may be close to its ceiling, comments from Ibercaja. In the last quarter (September compared to June), the mortgage rate rose only 7 basis points compared to 20 basis points in the second, 33 in the first and 66 in the fourth quarter of 2022. The twelve-month Euribor is stabilizing and Even so far in November, it is below previous months, since it averages 4.03% compared to 4.16% in October and 4.15% in September. That a ceiling is reached on interest rates and there is a little more visibility, since it seems difficult for the European Central Bank to further tighten monetary policy in a context of weakness in growth and moderation of inflationary tensions, is the first step for the mortgage market to stabilize. Despite this, at Ibercaja they consider that it is early to consider that the floor has been reached and we can end the year around 390,000 mortgages granted compared to 464,000 in 2022. In 2024 “we will probably see a moderation in the falls, according to Salary improvements allow a small recovery in housing accessibility after the sharp deterioration of the last year,” they conclude.