The outstanding balance of the Spanish mortgage debt falls month by month and already marks the minimum in twenty years. The repayment of debt, in some cases early thanks to the savings accumulated during the pandemic, has its reverse in the decrease in the signing of new mortgages after the rise in interest rates and the tightening of credit.
At the end of April, Spanish households owed 506,381 million euros to banks for their mortgages, almost 2% less than in the same month of the previous year, according to data offered today by the Bank of Spain. It is the steepest decline in percentage terms at least since 2021.
The amount of outstanding household mortgage debt is far from the 1.07 trillion euros reached in 2009 and is the result of a marked decline in the last decade, especially between 2010 and 2020. In those years, it fell by 44 %.
The general director of Financial Stability of the Bank of Spain, Ãngel Estrada, has assured today, in the sessions ‘NPL-Days Spain’, that “the path of repayment of loans has accelerated in most of the segments”. “In the case of mortgages, this high amortization path mostly affects variable mortgages, but also fixed ones,” he stated.
The banks themselves also highlight the transfer of part of the household savings to the early repayment of mortgages. According to the calculations of the banking association AEB, individuals have withdrawn 28,000 million euros in deposits since the beginning of the year to allocate them to reduce loans.
The counterpart has to do with the cooling of the housing market. According to the latest data from the INE, mortgage firms fell sharply in March, 15.7%, to 36,182 loans. It is the biggest setback in two years and leaves the volume of new mortgages in the first quarter 5.6% below the same moment of the previous year.
The data published today by the Bank of Spain also show that in April mortgages were amortized in an amount of 305 million euros higher than the signing of new credits. In January, the difference reached 3,825 million and so far this year there has not been a month in which repayments have not exceeded new loans. It is a trend contrary to what happened in 2021 and 2022.
In its latest quarterly report on financial stability, the ECB warns that the euro zone residential market is already “in correction mode” and warns that a fall in house prices may carry economic risks. This decline in prices could be greater “in countries with more institutional investors” in the real estate market.
