The mortgage market in Spain returns to an upturn in financing.
The mortgage market returns to an upturn in financing. According to data from the Bank of Spain for the third quarter of the year, the percentage of financing for the purchase of a home stood on average at 65.9% of the value of the property. It is the highest record in the historical series. The lack of family savings and the highest competition between banks encourage this increase.
The banking sector maintains its plans to expand mortgage credit after leaving behind the worst years of the housing crisis. Between September 2008 and September 2014, hardly any loans were granted for less than 60% of the value of the home. Families had to contribute with a lot of savings to be able to access a loan.
Since then, banks have gradually opened the credit flow, reaching historic highs in 2018. Three of the four last quarters have surpassed the 65% funding barrier. Between July and September, the so-called ‘loan to value’ of the new mortgages for the purchase of a house stood on average at 65.9% of the value of the property, the highest figure in the historical series begun in 2004.
The need of new clients among the banks in order to obtain greater profits, has been one of the causes for the increase in the granting of mortgages, and the increase in the percentage of loan financing as well.
Even so, this does not mean that banks continue to maintain a stability criteria for granting a loan. For residents in Spain, this criteria includes a fixed job, savings close to 30%, which includes 20% of the value of the home and around 10% from mortgage formalization costs and taxes.