Spain’s mortgage market has one of the largest growths in Europe

by Deborah Cater
Mortgage market on the rise in Spain. Image by

In the first four months of 2021, a record number of mortgages were taken out in Spain since the start of the real estate crisis in 2008. In fact, there were so many the country can count itself among the European leaders in the field of recovery in the mortgage market.

Compared to last year, the number of mortgages taken out rose by 56%. This is evident from data from both the Banco de España and the European Central Bank. In concrete terms, Spanish banks granted mortgages amounting to 18.348 billion in the first four months of 2021. That is the highest amount in more than ten years that was borrowed in a four month period for the purchase of a home.

Biggest growth since real estate crisis

However, this is not a historical growth in the mortgage market, because between the beginning of January and the end of April of 2008 – the year the real estate market collapsed, the amount was twice as large. With current growth of 56%, only the much smaller economies of Estonia and Malta now surpass Spain’s growth rate in the mortgage market.

In Italy, for example, this increase was 18%, in Germany just under 5% and in France the market even shrank by 9%. The European average in the first four months of 2021 compared to the same period last year was an increase of 6%.

ASSSA - health insurance in Spain

In 2019, growth was already above European average

Spain has thus put an end to the negative trend from 2020. Then the country, together with Cyprus, registered the largest contraction in the mortgage market (-18%). This happened after the number of mortgages taken out in Spain also increased by 27% in the first four months of 2019, when there was no crisis. That was a higher growth rate than France and Germany, but lower than that of the Netherlands, Italy and Portugal. In that year, the average growth rate on the European mortgage market was 24%, so Spain rated above average.

Current growth cannot yet match the figures recorded before the real estate crisis in 2008. However, it is triple the lowest level, which was in 2013.

Little benefit for banks

However, the banking sector has benefited relatively little from growth as the European Central Bank leaves its policy unchanged and keeps interest rates at extremely low levels. Experts take into account this situation will not even change before 2030 and that mortgages for home buyers will therefore still be relatively favourable for the time being.

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