Mortgages for foreigners in Spain have increased in 2023, according to the latest data provided by the mortgage intermediation company Housfy Hipotecas. Specifically, between the first and second half of 2023, they have gone from 7% to 11% of total hiring. This is an increase of 57%.
But not all of them had tax residence here. In fact, non-residents went from 3.5% to 8.2% during the same period, which represents a much larger increase: 134%.
Non-residents who buy in Spain are taxed mainly in France (17.0%), Switzerland (14.9%), Ireland (12.8%) or Germany (10.6%), according to the same data. by Housfy.
The United Kingdom (8.5%), Belgium (6.4%) and Luxembourg (4.3%) also stand out. Non-European countries such as the United States enter the list, with a solid percentage (8.5%), and the United Arab Emirates, somewhat more residual (2.1%).
Statistics show that mortgages are essentially accessed by citizens of Western countries or states whose population has very high purchasing power. And the banks are inclined towards those profiles that can offer, in the event of non-payment, a greater mortgage guarantee.
In general, our cities have lower house prices than in central and northern Europe. The fact that there are non-resident foreigners willing to pay higher prices for a second holiday residence or to invest in rentals has direct consequences on our housing market.
The most obvious is, perhaps, the increase in house prices. Housing is in recession in the rest of Europe and in other countries around the world. However, despite the decline in domestic demand in Spain due to restrictions on access to financing, foreign investment of this type prevents the price of apartments from falling.
Foreign investment, when not for residence, can also exacerbate the gentrification of popular neighborhoods due to real estate speculation and the social and urban changes that this entails.
The majority of Italians who take out mortgages here have their tax residence in Spain. They are 14.9% of the total foreigners with residence who have taken out a mortgage in 2023, according to the same Housfy Mortgages report. They are followed by the French, who account for 10.1%.
In this list, we find nationalities that already appeared before: British (4.6%), Germans (4.4%) and Belgians (3.6%). And at the same time, new passports from Eastern Europe appear, among which Romania (5.2%) and Poland (3.7%) stand out.
We see that, at the moment in which the traceability of the applicant’s tax data is within the bank’s reach, nationalities from developing countries or countries with precarious economies enter the list. Examples of this are Argentina (4.2%) and Venezuela (4.1%). China closes the list with 3.6%.
A foreigner who wants to request financing to buy a home in Spanish territory must request a mortgage from a bank here.
The latest Real Estate Credit Contracts Law, 2019, allows any mortgage to be changed to the currency in which the holder receives their income, which is why some banks have restricted the list of nationalities to which they grant loans.
In general, banks would not object to countries that have the euro as their currency. Also, as we have seen, countries with powerful currencies. The Swiss franc, the pound sterling, the US dollar or the Emirati dirham, among others, fall into this category.
Banks take many more precautions with those nationalities whose currencies have a high risk of volatility, either due to the lack of stability of their economy or recent geopolitical conflicts.
