Mortgages have become much more expensive than rents, but that does not prevent them from being still cheaper than paying a lease, according to an analysis by the iAhorro portal. Specifically, the loan fee is 12% cheaper on average. Of course, to access a mortgage there is the great hurdle of entry, which requires much greater savings.
In January the average mortgage payment was 993.72 euros, after rising 43% since June, according to the iAhorro Financial Effort Barometer. The rent, for its part, reached 1,113.72 euros, 3% less. Thus, despite the increase in payments and the Euribor, “it is still, on average, 12% more profitable to pay a mortgage than a rent.”
It is something that occurs “in almost all of Spain.” Only in Castilla-La Mancha is it cheaper to rent (510.48 euros on average) than to pay a mortgage (546.08 euros). Although it is also available in the Balearic Islands, it is only 10 euros and “it is practically as difficult to find an affordable rental or mortgage.”
Simone Colombelli, mortgage director of the portal, maintains that “despite the rise in interest rates and housing prices, the pressure of renting is still greater for Spanish families than that of mortgages.” Something that especially affects “in large cities where the demand for rental housing is also higher, such as Madrid, Barcelona or the Balearic Islands in general.”
The portal has compared the average rental price of an 80 m² home on the main real estate portals and the average mortgage payment according to monthly data from the INE. The average household income is 34,821 euros, according to data from the Living Conditions Survey.
Combining everything, we obtain the rate of effort that Spaniards make to cover housing expenses. To pay the rent they invest 38.4% of their salary, according to the same barometer, while 34.25% of their income goes to the mortgage. The difference has been reduced to four points between one and the other, when in 2023 it reached about 17 points: 26% was required to pay the mortgage and 43% for the rent.
If the effort is taken as a reference, Catalonia is where it is more profitable to mortgage than to rent. Thus, 45% of the salary is allocated to renting the home (1,459.01 euros on average) and 31% to paying the mortgage (995.34 euros). “In this case, they would save, on average, 463.75 euros each month if they were mortgaged,” they point out from iAhorro.
The big problem, logically, is that the mortgage requires a much higher down payment than the rent. Normally it is requested to have 30% of the value of the apartment, to cover the entry and the payment of taxes and expenses. In the case of rentals, up to four monthly payments are requested upon moving in (1 for the current month, 1 deposit and 1-2 additional guarantee). “The initial effort is much greater in the case of those with mortgages,” iAhorro states.