How many mortgages are there in Spain?
18 October, 2023 | M Aparicio
Mortgages are a fundamental component of the financial system in Spain and play a crucial role in the acquisition of homes by citizens.
We will answer the question of how many mortgages are there in Spain from Hipotecas Plus, and also provide other data we consider interesting, such as the latest data on mortgages constituted in Spain, the average interest rate of mortgages on homes, their average price, and the percentage of fixed and variable mortgages.
We will also discuss the protection and security that citizens have thanks to the reforms of the mortgage market that were established after the financial crisis of late 2007.
To answer the question of how many mortgages are there in Spain, we will rely on a survey and a press release from the INE.
In the Survey on Essential Characteristics of Population and Housing (ECEPOV) of 2021 published in February 2023, it is noted that in Spain there are 14.2 million people who reside in a home they own but have not yet finished paying off. This number is already high in itself, but it should be noted that these are citizens who live in their homes, meaning they refer to mortgages on primary residences.
So, to this high number of people with mortgages, we should add those citizens who have mortgages on second homes, or other types of properties such as commercial spaces, garages, etc.
In the INE press release on Population and Housing Censuses 2021, published on June 30, 2023, it indicates that in that year the total number of households in Spain was 18,539,223, exceeding the 2011 data by 455,531.
According to the INE, in 2021 26.4% of these households still had pending payments, meaning, with a mortgage. If we use the calculator, we see that this 26.4% corresponds to 4,894,354 mortgages.
From this data, we can deduce that there are approximately 5 million mortgages on primary residences in Spain
Why is the question about how many mortgages are there in Spain important?
The question How many mortgages are there in Spain? is important for several reasons and may be of interest to many groups or sectors, such as economists and financial analysts, the government and regulators, banks, home buyers and sellers, investors… but also to consumers and citizens, as knowing this information can be relevant for understanding the economic landscape and how it could affect their personal financial decisions, such as the case of buying a home.
Latest Data Regarding the Establishment of Mortgages
Other interesting and more recent data that we can offer about mortgages are as follows: in July 2023, 29,223 mortgages on homes were established. This figure translates into a decrease of 18.8% compared to July 2022. The average amount of the mortgage also decreases, standing at €143,412, which means a drop of 2.6%.
The average interest rate at the beginning of the mortgage on housing is 3.24%, which translates into an increase of 1.32 points compared to July 2022.
We are well aware of the cause of this increase: the rise of the Euribor, which is the main indicator of the price of mortgages in Spain. The mortgage index has been rising consecutively for many months during 2022 and 2023.
What Percentage of Mortgages are Fixed and Variable Rate?
As of the latest data from July 2023, 42.2% of mortgages on homes are variable rate and 57.8% are fixed rate. Currently, citizens prefer fixed-rate mortgages to variable ones in greater proportion. The supremacy of fixed-rate mortgages over variable ones has not always been the case.
For many years, variable-rate mortgages were more attractive to citizens. However, the Euribor remained below 0% for many years (from February 2016 to April 2022), and banks and financial institutions began to make fixed-rate mortgages very attractive, even offering interest rates of 1.5%.
With such mortgage offers, citizens eventually began leaning toward fixed rates over variable rates, and this preference continues to be maintained due to the rapid rise of the Euribor in the last two years.
We show you in the following graph this change in trend from variable to fixed rates in mortgages.
Despite the large number of mortgages in Spain on primary residences, approximately 5 million, we should know that citizens have a high degree of protection at the regulatory and administrative level. This is thanks to significant reforms that were applied in the mortgage market after the financial crisis that began at the end of 2007. We will address this in the following point.
Reforms in the Mortgage Market
Since the financial crisis, a series of reforms have been implemented in the Spanish mortgage market to improve transparency and protect consumers. Some of these reforms include:
- Transparency in Conditions: Regulations have been established that require banks to provide clear and understandable information about the conditions of mortgages, including associated risks and interest rates.
- Limitation of Fees: Limits have been set on the fees that banks can charge for granting and canceling mortgages.
- Consumer Protection: Measures have been implemented to protect consumers, such as the ability to switch from a variable-rate mortgage to a fixed-rate mortgage, thus limiting the volatility of interest rates.
- Foreclosures: Measures have been introduced to make foreclosures more difficult, and a code of good banking practices has been established.
These reforms have contributed to the stabilization of the mortgage market in Spain and the protection of consumers. In addition, the Bank of Spain oversees and regulates the activities of financial entities to ensure compliance with regulations.
