Economic instability, the rise in interest rates, the Euribor or the war in Ukraine and Russia have generated an environment of tension at a global level, which has directly affected all markets and different areas. In the 2008 crisis, for example, one of the hardest-hit sectors was real estate, and although this year it has also been affected, it is not expected to reach a bubble like at that time. However, a pattern is repeating itself: access to mortgages is increasingly difficult for young people and families, and experts indicate that the new Housing Law, which came into force this Friday after its publication in the BOE, will be another factor that will put more brakes on the granting of bank loans of this type.
During the second day of the SIMA (Madrid Real Estate Show), various agents in the sector have commented to this newspaper that “the conditions are not ideal” for those who want to obtain a residential loan. “The housing law is going to cause convulsions in certain personal and particular aspects in the part of property and it is going to directly affect the offer and therefore, the price”, comments the director of franchise development of RN Tu Solución Hipotecaria, Christian Aguilar. The expert clarifies that raising prices is a ‘double-edged sword’ and we will have to see how the market reacts to “electoralist” proposals such as 20% guarantees and that this is linked to affecting mortgages.
For the president of the Federation of Real Estate Business Associations (Fadei), Montserrat Junyent, the sector is experiencing a time of adjustment and predicts that the Housing Law will not help solve the problem. In addition, regarding the loans, she assures that Spain is in full swing of foreclosures with the banks, but she does not do anything visible that the administration does not do to favor the environment: “Access to these credits will now be more difficult. Everything will be more demanding. Whoever asks for the mortgage is going to have to have a certain level of solvency even if the Government tries to favor them with measures such as 20% guarantees, but they are not enough ”, she points out.
A few days ago, the Moody’s rating agency published a report warning about the negative impact of the fall in mortgages for Spanish banks. He specifically mentioned that they expected the “drop in mortgage volumes in the coming months” to persist due to the rate hike that will continue to reduce demand for them. “The strengthening of the residential mortgage market is negative for the credit of Spanish banks, because it is a key line of business, responsible for 44% of the system’s loan portfolio,” stated Moody’s analysts.
The fall of banks such as the SVB in the United States ended a string of economic events that brought about a crisis for banks that persists to this day. “This situation has caused turbulence in the Euribor and we believe that it will reach at least 4% and stabilize,” says the representative of RN Tu Solución Hipotecaria. For these reasons, the agents of the sector anticipate a 2023 with adjustments, decreases in the purchase and sale of homes, also decreasing loan requests. Sources from the Banking Products Negotiating Agency also stress that the Housing Law, although it does not directly affect it, is another of the factors that put a brake on the mortgage business.
Regarding prospects for this year, the director of studies and speaker at Pisos.com, Ferrán Font, also comments that the sector will go towards a more moderate scenario than last year, both from a transaction point of view and from real estate loans. It’s because “it will be a more complicated access. The banks are much more restrictive than before.” Junyent adds that this occurs because “you have to think that the bank is going to look for the same thing as the owner: a solvent profile, security and stability. It will not rent to anyone, and even less so now with the Law… Just like the banks that will not give credit to everyone who asks for it either.”
The banks “are going to look for the same thing as the owner: a solvent profile, security and stability. They will not grant credit to everyone”
ICO guarantees
In order to solve the general problem of access to the acquisition of a home for young people and families with dependent minors, the Government has decided to launch, together with the ICO, a 20% guarantee plan so that they can have their first home. From the Negotiating Agency they explained that this measure could cause a ‘bubble case’ in which there is more demand than supply and therefore, raise housing prices. “It is a measure that was created more to stimulate the price of housing than to facilitate access,” they sentenced La Información when this measure was communicated.
This measure aims to help at least 50,000 families: “We have made an approximate calculation of possible beneficiaries of the line of guarantees, and in a first calculation it may be up to 50,000 people benefited,” said the Executive. Despite this, Kelisto’s personal finance spokesperson, Estefanía González, assures that this could be affected by the high cost of mortgages at this time: “A measure like this, applied a year earlier, would have had a much greater impact in the segment of the population to which it is directed, but in the current context, we doubt that the estimate of 50,000 potential beneficiaries can be a reality”, he says.
