Spain’s Mortgage Market Heats Up, Led by Madrid & Barcelona

16 February 2018 – Eje Prime

The mortgage market in Spain is heating up again starting with its traditional strongholds: Community of Madrid and Cataluña. During the 11 months to November, those two regions, together with La Rioja and Cantabria, saw the highest increases in the number of mortgages constituted in the country.

Whilst Congress is still processing a new Mortgage Law, which looks set to introduce important increases in guarantees and transparency for bank users, the number of mortgages is picking up again across the country, with almost 401,000 operations formalised during the first eleven months of last year.

Between January and November, 69,885 new mortgages were signed in the Community of Madrid, according to data from Spain’s National Institute of Statistics (INE). That figure, the second highest in Spain (after Andalucía, the most populated community) represents an increase of 15.7% compared to the same period last year.

In the case of Cataluña, 61,831 mortgages were constituted, up by 10.5% compared to the first eleven months of 2016. Both regions outperformed the evolution across Spain as a whole, where the number of mortgage contracts signed increased by 7.8% between January and November last year.

Nevertheless, the rate of growth in both Cataluña and Madrid was surpassed by La Rioja, which saw an increase of 26.8%. Cantabria also performed well, with a 15.4% increase in the constitution of mortgages during the eleven months to November. Aragón, the Canary Islands, Extremadura and Navarra all saw decreases in the number of mortgages constituted in the period from January to November.

In addition to a rise in the number of mortgages, the average amount of mortgages is also gradually recovering. In November, for example, the average mortgage in the Community of Madrid amounted to €216,137 (the highest amount in the country given the more expensive house prices in that region), up by 9.8% compared to a year earlier. In the case of Cataluña, the average mortgage amounted to €166,191, up by 17.3%.

Far from the pre-crisis levels 

Although the tone of the mortgage market in Spain is recovering, the magnitudes are still well below their pre-crisis levels. In 2006, for example, more than 1.7 million mortgages were constituted in the country between January and November, for a higher average amount.

Since 2006, the average amount of mortgages in the Community of Madrid has fallen by 58.5% and, in the case of Cataluña, the decrease amounts to 58.5%. It just so happens that the decreases in both regions have been lower than the reduction across the country as a whole, where the average mortgage is now 78% lower than it was in 2006.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake

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