What will mortgages be like for 2022 in Spain?
After a second year of major disruption due to the health crisis, the Spanish real estate market could be on the verge of collapse given the restrictions we have all had to face. However, looking at the latest statistics, it is clear that the scenario is much more positive.
Domestic and international trading is currently flat and, at the higher end of the market, prices have even increased in some areas. It is widely thought that during 2022 property prices will rise in line with economic growth.
What are the INE data on mortgages in 2022?
According to the latest statistics from the INE, the National Statistics Institute of Spain, the average mortgage in Spain has an interest rate of 2.11%, for variable-rate mortgages; and 2.7% for fixed-rate mortgages. It should be noted that around a third of Spanish mortgages are variable, two thirds are fixed rate and the average duration is 24 years.
Mortgage rates have remained stable and at historic lows in recent years in Spain (the Euribor has been in negative territory since 2015). Banks have lowered interest on fixed-rate mortgages (since they tend to make more money than variable-rate loans that rely on Euribor) and are now at their lowest level since 2006.
It is common to find fixed rates between 1% and 1.5%, and variable rates between Euribor +1% and Euribor + 1.5%. The Euribor reached its lowest level in history of -0.648% in December 2021, although it later rose back to its previous level of around -0.55%. However, various mortgage advisers based in Spain, we could start to see mortgage rates increase slowly during 2022.
An opportunity for overseas buyers
Banks are also starting to recognize the value of foreign buyers, who make up a significant proportion of homeowners in Spain. With a myriad of attractive mortgage loans, many homeowners may be tempted to re-mortgage, something that used to be quite uncommon in Spain.
In recent months, some media outlets have reported that the current market could indicate a property bubble in many parts of Spain, but this is a claim rejected by most analysts.
Although the consequences of the pandemic and its impact on the real estate sector are not yet entirely clear, either due to the new variants of Covid and the prevailing inflation, what is known is that foreign buyers will be key to the recovery post -Covid.
Therefore, 2022 appears to be an opportune time to capitalize on relatively competitive prices and continued low interest rates.