If the health emergency derived from the pandemic has also rapidly translated into the crisis of many economic sectors, the home mortgage is no exception. However, and despite the fact that there were sharp drops in the number of operations in the 11 months that followed the proclamation of the first state of emergency, mortgage credit shows signs of having reached the levels prior to the outbreak of the coronavirus. Of course, some characteristics of the loans have changed and, at least in the short term, experts do not expect to see again the proportions of financing on the price of the house that could be observed in some cases before the pandemic, and they point out that the criteria for accessing it have been toughened and that the entities have included among the profiles considered most solvent those related to new technologies.
It all started in March of last year. The halt in economic activity decreed to deal with the spread of the virus and the other restrictive measures on mobility also hit the mortgage market hard. Loans granted to acquire a home went from 36,702 registered in February, the last full month without a state of alarm, to 27,300 in March, according to the INE. With respect to the same periods of 2019, if in February there was a rebound of 18.2%, in March the decrease was 11.7%.
From the third month of 2020 to January of this year, closed operations never exceeded 30,000 units – a level that was very common to exceed in the time that preceded the outbreak of the crisis, with the minimum of 19,825 in August, and with the most pronounced negative inter-annual variation, in January (-31.6%). Just four months ago, in February of this year, the turnaround took place, with the signing of 31,647 mortgages. A figure that, however, was still 13.7% below the same month last year. But the indication that in all probability the mortgage market has entered a new stage is the almost 37,000 loans granted in March, which represents a jump of 35% compared to March 2020.
Rise of digital
At that time – the first phase of the crisis – the closure of bank branches led to the rise of the digital channel. “During the first 30 days of confinement, the drop in requests we received from users was brutal ”, admits Simone Colombelli, director of Mortgages of the online banking comparator iAhorro. As of mid-April, however, Internet users’ interest in this financing product regained a certain air of normality. “June and July were very good and this trend continued in the latter part of the year,” he recalls, referring to his company. Regarding the operations effectively closed, “in the hardest part of the pandemic there was a slowdown, but, in the middle of the year, a rebound, because the earnest money contracts signed before the covid had accumulated,” says Colombelli, who adds that, in iAhorro, these data have already returned to their pre-crisis channel.
For the spokeswoman for the real estate portal Fotocasa, María Matos, the evolution “so bulky” of the mortgage market in March “shows that it has recovered”, along with real estate. “The great improvement in mortgage data was to be expected, since the banking sector has been working to favor it, lowering prices in order to stimulate sales”, emphasizes Matos, and explains: “In recent months we have seen several entities with the biggest price drops on record, which has convinced many small savers to jump in ”.
In this way, the average variable interest rate has been cut both – pushed towards the ground by a Euribor at historical lows, and with “the forecast that this reference index will remain below 0% in the next five years,” adds Matos— as the fixed one. The first came from 2.47% that marked in February of last year, and in March of this year it was 2.22%, although its minimum for this period was 2.12% in May and September 2020. The The second reached 2.97% in the last full month before the state of alarm and stood at 2.75% three months ago, although its minimum in this period dates back to February of this year (2.74%). “The best interest rates in history,” emphasizes Colombelli.
Regarding the type of loan, “in a period of great uncertainty, the user has opted for the fixed ones, promoted by the entities in order to guarantee a profitability that with the variables is very difficult to estimate”, emphasizes Colombelli. In this way, fixed-rate mortgages, years ago very minority, already represent 56.2% of those that were constituted on housing in March, against 43.8% of the variables.
For the director of Mortgages of iAhorro, in the immediate future there will remain some news that the pandemic brought in the mortgage market, such as a notable decrease in the granting of loans that finance the entire value of the property, an increase in the requirements of banks regarding the criteria for accessing mortgages and better consideration by profiling entities that belong to certain sectors linked to new technologies, such as computer science.
“The most creative offers and products for specific audiences have also come to stay, such as those designed for young people under 35 years of age”, Colombelli underlines. In his words, “the crisis has triggered savings, but it has not impacted the real estate sector as it did in 2008”. Although she assumes that “it is very difficult to foresee the recovery of the sector”, Fotocasa’s spokesperson, Matos, believes that “from the last quarter of the year we will be able to begin to see how the real estate business recovers its investment in Spain and at the end of 2021 obtain data much higher than those of the end of 2020 ”.
Regarding mortgages, “it is difficult for workers who are still in an ERTE to get a loan of this type, but those who have continued working and have been able to save have found a very dynamic market with very good offers that , for example, it allows them to change to a better property than the one they had, ”says Colombelli. Looking ahead to the next semester, “we do not believe that the risk assessment criteria will change or conditions will worsen by the entities,” he concludes.