The number of property sales has been rising sharply after the sector was paralysed for several months due to the Covid pandemic, and more people are opting for mortgages with a fixed interest rate these days rather than a variable one.
According to the latest figures from the National Institute of Statistics (INE), which are for last November, 67.5 per cent of buyers took out a fixed-rate mortgage and 32.5 per cent opted for a variable one. In other words, two out of every three. In addition, this percentage has remained above 60 per cent for seven consecutive months.
Experts say the low Euribor rates, and the view that the central banks are planning to remove stimuli ahead of interest rate hikes, could be behind this notable increase, although the aggressive policies used by the banks to attract new clients are also a factor.
It is true to say that with interest rates at their present level, mortgages are in no way a profitable product for the banks, but most of them know that a mortgage is ideal for opening the door to other products which generate higher commissions, such as investment funds and insurances which are normally linked to loans in order to obtain advantageous interest rates. In other words, they are a way of acquiring clients who, in the end, become the most profitable.
The battle to obtain mortgage clients is reflected in the average cost of fixed-interest loans which, according to the INE, was at 2.74 per cent, while the starting interest for variable rate mortgages went down to an average of 2.17 per cent.
The average interest rate for mortgages was 2.53 per cent in November. That was 0.02 points lower than in the previous month which had seen the highest figure since May 2021.
In total, the number of mortgages granted for property purchases in Spain was 36,220, in November, which was 24.1 per cent more than in the same month in 2020. The average amount borrowed was 138,189 euros, which was a slight year-on-year increase of 1.5 per cent, while the amount of capital loaned grew by 26% to 5.0052 billion euros.
With the increase in November, the number of mortgages on properties rose year-on- year for nine consecutive months, although the growth in November was much lower than that of September, when the figure shot up by 57.7 per cent.
In fact, the month-on-month rate (October compared with September) for mortgages fell by 14.8%, while the capital loaned dropped by 18.2 per cent.