Mixed-rate mortgages continue to gain ground and now account for 40% of all new contracts. This type of loan began to regain its popularity in mid-2022, when it only accounted for 14% of all mortgages that were signed, according to the Spanish Mortgage Association (AHE) in the bulletin for the fourth quarter of 2023.
Within this type of loans, those that have grown the most in the last period have been those that have a fixed rate for between five to ten years from the signing of the mortgage. In just a year and a half, their hiring has increased from 4% to 17%.
The association explains that these mixed operations are in which the rate applied to the loan remains unchanged for a period of more than one year and less than ten years. Thus, the client can guarantee a fixed rate at “reasonably competitive” levels during the first years of the life of the loan, with the “confidence” that in the future the rates will evolve in a manner favorable to their expectations.
Popularity of variables decreases
The other modality that brings together the largest volume of new operations is fixed-rate loans, which represent 43%, although this share has been reduced “significantly” since June 2022, when interest rates were still at low levels. . and this modality accounted for 67% of new originations.
Regarding variable rate loans, new loans signed in this modality accounted for the remaining 16%. This category, which was “very popular” in the Spanish mortgage market before the real estate crisis, continues to have, however, a relevant weight in the portfolio, with 55% of the outstanding balance.
real estate credit
On the other hand, AHE’s quarterly bulletin also collects data on the composition of Spanish banks’ real estate credit. In general, the association comments that during the third quarter of 2023 the slowdown in exhibitions has continued, both from an annual and quarterly perspective, with decreases of 4% and 1% respectively. The three portfolios that comprise it show a negative evolution, although the magnitude of the fall was heterogeneous between segments, both in relative and absolute terms.
In the residential segment, the AHE highlights the “high pace” of amortizations and the lower dynamism of activity, a consequence of the tightening of financial conditions for access to credit. In this way, the outstanding balance of the home mortgage portfolio stood at around 480,000 million euros, 3.3% less year-on-year. The drop is 0.7% compared to the second quarter. For its part, the rehabilitation of housing, with a balance of 15,693 million euros, shows several decreases that stand at 5.5% year-on-year and 2.0% quarterly.
In parallel, credit exposures to the construction sector and real estate activities, with a volume of 25,670 and 70,308 million euros respectively, have also decreased “significantly” during the third quarter, the last known period. Collectively, these credit exposures contracted by 7.4% in the last 12 months, which is equivalent to 7,617 million euros.
The real estate portfolio has been experiencing a “recomposition” since approximately 2008 in which the household segment gains weight (83.8%) to the detriment of the construction sector (4.3%) and real estate activities (11.9% ).
“The difficulties in developing new real estate developments due to the shortage of final land in an environment in which greater prudence in the financial sector operates explain, to a large extent, the most pronounced slowdown that these productive activities (construction and real estate activities) have experienced. in relation to the individual segment”, concludes the AHE.
