Mortgage contract signings fall by 30% in Malaga province in worst August since pandemic

In August, just 1,444 mortgage contracts were signed in Malaga, a figure that is almost 30% lower than in the same month a year earlier, when there were a total of 2,054, according to figures published on Wednesday by Spain's INE national statistics institute (INE). The data equates to the worst interannual drop in Malaga province for the financing of housing in August since the pandemic: in 2020, some 975 home loans were contracted, with 701 in 2019.

The fall in mortgage signings contrasts with what happened in the country as a whole, where the decline from one year to the next is 22.7%, ie: 36,646 loans in August 2022 compared to 28,344 in the same month this year.

But there is great variability depending on the area. In Andalucía, in the provinces of Almeria and Huelva, the fall in mortgage signings has been around 40%. And in Madrid and Barcelona it has exceeded 31%. Meanwhile, Cordoba province saw a rise of 5% this August compared to a year earlier.

On Tuesday the INE published the figures for home sales and purchases in August. Comparing this data with the mortgage figures, one sees that the deterioration in the credit market has occurred, at least in August, at a rate double that recorded by transactions. Mortgage signings fell by 30% year-on-year in the province, while purchases of flats fell by 17%.

In August, in Malaga province, only a third of the sales transactions carried out required bank financing, the rest were paid in cash. Between January and August of this year, some 13,098 mortgages have been taken out in the province, 15.4% fewer than in the same period in 2022. This deterioration is similar to that suffered by the Spanish market as a whole, where the 261,013 loans this year are 15.25% down on the 308,519 a year ago.

According to the analysis of Santiago Martínez, head of Economic and Financial Analysis at Ibercaja, the downward adjustment in home sales and mortgages granted is due to the rise in interest rates. "The monetary authority has raised the reference rate by 450 basis points, and this movement has been transferred in a cushioned way to mortgage interest rates," he said. The average interest rate in August was 3.25%, up 130 basis points from 1.95% in August 2022 and 149 basis points from the low of 1.76% in February 2022.

But, according to Javier Torres, of Clikalia, although everything points to an environment of high rates for a period of several years, now "we will have some stabilisation in the mortgage offer of financial institutions". Martínez added: "It is to be expected that the rate of fall in sales and purchases and mortgages granted will moderate as we approach sustainable transaction levels in the medium and long term". This expert also said that the financial situation of Spaniards, in aggregate terms, "is very healthy".