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Why fewer people are signing mortgage contracts on the Costa del Sol
Finance

Why fewer people are signing mortgage contracts on the Costa del Sol

A 30% year-on-year drop was recorded in the last month alone, and is in line with figures from the rest of Spain

Cristina Vallejo

Malaga

Tuesday, 28 November 2023, 13:45

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Fewer people are signing mortgage contracts on the Costa del Sol and in Malaga, with the province recording an almost 20% drop in the first nine months of this year, new data shows.

Between January and September, 14,533 mortgages were signed on homes in Malaga province, a decrease of 17% compared to almost 17,500 in the same period last year. It's in line with national figures where 292,067 mortgages were signed in the first nine months of 2023, some 17.18% below the 352,653 signed between January and September last year, according to Spain's INE national institute of statistics.

The 1,435 mortgages signed in Malaga in September are 30% down on the 2,034 signed in the same month last year, the figures also show. Nationally, mortgages signed this September barely exceeded 31,000, compared to the more than 44,100 in September 2022. Mortgage signings in September are the lowest since 2020 in Malaga province when just 1,126 were finalised.

Andalucía

Mortgage signings also dropped in other Andalusian provinces. In Cordoba the number of mortgages signed halved between September 2022 and the same month of 2023, falling from 628 to 331. Granada recorded a 34% drop, Seville registered a 16% decrease and 5% in Huelva.

A rise in financing costs is believed to be behind the slip with the average interest rate on new home loans rising by more than one point compared to last year, to 3.26%. But, according to Santiago Martínez, head of economic and financial analysis at Ibercaja, "one of the best pieces of news is that the rate of increase in mortgage rates is slowing down and we may be close to the ceiling". He pointed out that in the last quarter, the mortgage rate rose only 7 points, compared to 20 in the second quarter, 33 in the first quarter and 66 in the fourth quarter of 2022. He predicted that 2024 will see a moderation in the falls as wage improvements allow a small recovery in housing affordability.

The second highest average mortgage

According to the figures, Malaga province has the second highest average mortgage in Spain: 191,551 euros. It is only surpassed by 253,381 euros in the Balearic Islands. The province is ahead of Madrid and Barcelona, where the average home loan is less than 191,000 euros and 180,000 euros. A year ago Malaga had the sixth highest average mortgage in Spain.

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