In July 2024, the number of mortgages taken out on houses increase of 23.5% compared to the same month of the previous year, reaching 36,260 mortgage loans, the highest figure for the month of July since 2021. This increase coincides with a drop in the average interest rate, which fell from 3.26% in June to 3.17% in July, its lowest level since June 2023. On the other hand, average amount Mortgage loans also increased by 6.2% year-on-year, reaching 151,944 euros, which generated a 31.2% increase in loaned capital, reaching 5,509.4 million euros. This change reflects the impact of recent interest rate cuts promoted by the European Central Bank (ECB), in response to the moderation of inflation and the downward movement of the Euribor.
41% of mortgage loans signed in July were variable rate, while the remaining 59% were fixed rate. THE adjustable rate mortgages They recorded an initial interest rate of 2.99%, up from 3% for the first time since August 2023. In contrast, fixed rate loans reached 3.32%. Despite these improvements, high house prices, which have increased by 8.5% year-on-year, continue to make access to housing difficult for many people, keeping prices and demand high.
Changes in the mortgage market
He real estate market and the mortgage industry are facing a moment of uncertainty. Property prices continue to rise, while mortgage terms are constantly changing, affecting both those who already own one and those looking to purchase a property. Gonzalo Bernardos, professor of economics at the University of Barcelona, shared an analysis on the evolution of mortgage lending until the end of 2024.
Bernardos stressed that a significant change was approaching: “The cycle has changed and what is happening are declines.” This forecast is based on the recent movement of the US Federal Reserve (FED), which reduced interest rates, which could influence Europe, particularly on fixed-rate mortgages.
In 2023 and part of 2024, the interest rate They have soared due to the rise in Euribor, which has increased the monthly payments on many variable mortgages. However, Bernardos predicts that this trend could be reversed. Although variable rate mortgages are more dependent on Euribor and European Central Bank (ECB) decisions, the analyst points out that fixed rate mortgages could benefit from lower rates in other markets, such as in the United States.
By the end of 2024, Bernardos estimates that best credit profiles They could access fixed mortgage loans with interest rates close to 2%, which would represent a great opportunity compared to recent values which exceeded 3%. This change could represent considerable savings for those who renegotiate their loan or acquire a new mortgage under these conditions.
Bernardos’ analysis in a program The sixth suggests that the end of the FED’s interest rate hike cycle could lead to a similar trend to the ECBwhich would relieve pressure on family economies in Spain.
The Euribor continues its free fall
Since July 2022, holders of variable rate mortgages have suffered the consequences of the increase in interest rates by the European Central Bank (ECB). However, as of September 2024, this cycle appears to have ended, at least for now.
Euribor, an index that determines the interest on many variable mortgages, surprised the market by closing September below 3% for the first time since November 2022, reaching 2.9%. This will bring considerable relief to mortgagewho will benefit from an average reduction of 1,200 euros per year on their fees.
He Accelerated fall in Euriborwhich has accumulated seven months of decline, exceeded analysts’ expectations. In March, the index was at 3.718% and continued to decline month after month to reach the estimated level of 2.940% for September. This reduction will mainly benefit those who revise their mortgage loan with this new value, since the monthly payments could decrease considerably.
If we take an example with a mortgage of 200,000 euros over 30 years and Euribor interest + 1%, the savings would be significant. Before the revision, if Euribor were at higher levels (around 3.7%), the monthly payment would be around 1,028 euros. With a Euribor at 2.9% after revision, the new fee would fall to around 910 euros, which represents a saving of 118 euros per month, or 1,416 euros per year. In the case of a semester exam, with previous fees of around 986 euros, these would drop to 910 euros.
The ECB, after the 2022 increases, adopted a more flexible posture in 2024reducing rates twice, which directly influenced the fall in Euribor. Analysts expect this decline to continue, with year-end projections of between 2.5% and 3.2%, which could generate greater savings for mortgage holders.
