42.45% of the homes sold in Spain in August were paid for without a mortgage, according to data on home sales and credit granting provided by the National Institute of Statistics (INE). The public institute explained today that the housing mortgage firm fell 22.7% year-on-year in August, thus chaining six months of falls of more than double digits, while interest rates have skyrocketed, which stood at 3.25%, the highest level in seven years (since July 2016) and 1.3 points above the interest rate a year ago.
Home sales, however, have fallen less, 14.4% in August, because the percentage of homes purchased in cash has grown strongly, reaching 20,908 units in August. In the first eight months of the year, 152,325 homes have been purchased in Spain without a mortgage, 36.85% of all sales.
Cash purchases are especially concentrated in second homes, and correspond to both foreign citizens with high purchasing power and local buyers, residents of large cities, who buy in second tourist lines or in rural areas. Thus, cash purchases account for 56.6% of the sales that have been made so far this year in the Valencian Community, 49.2% in La Rioja, 47.8% in Murcia, 45% in Cantabria and 44.5% in Castilla y León.
On the other hand, in areas of first residence, where housing prices are also high, these percentages are smaller and represent 10.66% of purchases in the Basque Country, 17.63% in the Community of Madrid, or 29.97% in Catalonia.
According to María Matos, director of studies at the Fotocasa portal, the rise in rates has changed the profile of the home buyer. “Those who take out a mortgage to buy a second home are decreasing,” while in the large markets, with higher prices, “there is now an increase in a figure with high economic solvency, with knowledge in the real estate sector and an increase in foreign demand.” . This profile needs less financial help than the average Spaniard because it has greater purchasing power.”
According to Fotocasa data, the typical buyer of a second home in Spain is a middle-class person, over 41 years old, 91% of whom already own their first home, and who are looking for a location other than where they live. , but close. The socioeconomic profile of these buyers has decreased and a significant percentage live alone or with their parents, partly due to the greater use of these properties due to the rise of teleworking. The majority consider that the most important factor in their purchase decision is the price (58%) and highlight its value as a long-term investment.
The data published today by the INE indicate that the average amount of mortgages granted in August was 138,171 euros, which represents a decrease of 4.6% compared to a year ago, because the rise in rates allows for less debt. so that the fee does not exceed 33% of the family income established by the bank. The capital lent by financial entities stood at 3,916.3 million euros, with an annual decrease of 26.2%.
The INE shows that until August the drop in mortgage granting was 15.4%, with the largest accumulated decreases in La Rioja (-35.75%), Madrid (-21.6%), Galicia (-21, 1%), Cantabria (-20.77%), Castilla y León (-17.78%), while in Catalonia it was -16.6%.
42.1% of the mortgages were signed in August at a variable rate, an heading that includes the so-called mixed mortgages, which in the first years guarantee a stable installment, while 57.9% were signed at a fixed rate. The bank has sharply raised the fixed rate, which stands at 3.54% on average, to accelerate the contracting of variable formulas, which have been signed at an average rate of 2.89%, which explains the loss of weight of fixed mortgages, which in April 2022 reached 75% of the market.
Mortgagors, for their part, continued to be very active in trying to improve their financial conditions in the face of the rise in rates, so that 8,270 novations were carried out (or modifications produced with the same financial institution), with an annual increase of 4.1%. For its part, the number of operations that change entity (subrogations to the creditor) increased by 32%.
