Economy
Mortgage approvals see sharpest fall in the last two years, while average mortgages reach record high
Average mortgage borrowing has risen above 180,000 euros, making home ownership harder to afford despite a 5.1% rise in the number of mortgage approvals in the first seven months of the year
The number of mortgage approvals in Spain fell sharply in July, while the average loan reached a record high.
A total of 43,372 mortgages ... were signed in July, 3.5% fewer than in the same month last year. It was the biggest annual decline since June 2024, according to figures from the INE (Spain's national statistics institute).
At the same time, the average mortgage rose by 10.9% year on year to 180,785 euros, as rising house prices force buyers to borrow more to finance their purchases. The average interest rate on new mortgages stood at 3.01% in July, up from 2.96% in June and its highest level since January 2025.
The rise came after the ECB (European Central Bank) increased interest rates for the second time this year, taking its main rate to 2.5%. Higher borrowing costs are making mortgage lending less favourable and contributing to the decline in the number of new loans.
Despite uncertainty over the future path of interest rates, 303,999 mortgages were taken out in the first seven months of the year, 5.1% more than during the same period in 2025.
The figures suggest that the mortgage market is continuing to grow overall, although the latest data partly reflect home purchases and financing arrangements that began at least two months earlier, when lending conditions were less restrictive.
Most buyers need a mortgage
Almost seven in ten households (68%) that bought a home during the first months of 2026 needed a mortgage, according to Fotocasa research.
Some 54% of all buyers financed their purchase entirely through a bank, while a further 15% combined a mortgage with financial help from their families.
The figures highlight how heavily homebuyers rely on borrowing to purchase a property. Future decisions by the ECB on interest rates could therefore put further pressure on the number of new mortgages.
Despite this, analysts say demand remains strong and lenders are still willing to provide mortgages.
"The difference is that month by month we are seeing house prices force buyers to take on more debt to complete the same purchase, which raises the barrier to entry for part of the market," expert at mortgage broker RN Tu Solución Hipotecaria Ricardo Gulias said.
The increase in the average mortgage has also pushed up the typical repayment period.
The average term for a home loan reached 26 years in July. Some 37.7% of mortgages taken out during the month had variable interest rates, while 62.3% had fixed rates. The average initial interest rate was 2.97% for variable-rate mortgages and 3.03% for fixed-rate mortgages.
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