It adds a volume of more than 160,000 properties, the highest record in a third quarter since 2007, according to the Spanish Mortgage Association.

It adds a volume of more than 160,000 properties, the highest record in a third quarter since 2007, according to the Spanish Mortgage Association.

It adds a volume of more than 160,000 properties, the highest record in a third quarter since 2007, according to the Spanish Mortgage Association.

Homes under construction.

The demand for housing returns to the levels prior to the bursting of the real estate bubble in 2008. Thus, it increased by 21% in the third quarter of 2021 compared to the same period in 2020, reaching a volume of over 160,000 properties. This is the largest record in a third quarter since 2007, according to the Spanish Mortgage Association.

Nevertheless, The AHE clarifies that residential demand fell by 10% compared to the second quarter of 2021, when records of increase were broken. As far as supply is concerned, the quarter closed with a volume of new construction permits of more than 28,000 homes. Therefore, 4% more in quarter-on-quarter terms, and 37% more, in year-on-year terms.

As a summary, the AHE indicates in its bulletin that the real estate sector indicators were in the third quarter of 2021 at “similar levels” to those of 2019.

Likewise, the AHE points out that the main reference indices for the mortgage market continued to fall. This was so due to the expansionary policy that the European Central Bank (ECB) has been applying, setting record lows throughout the year.

The 12-month Euribor, which already adds six years in negative territoryclosed the year with a rate of -0.502%, breaking the barrier of the marginal deposit facility, which stands at -0.500%.

fixed rate

Against this background, the weighted average rate on operations to finance home purchase stood at 1.47% in October 2021. “Levels clearly below those estimated a year ago,” according to the AHE.

In this context of interest rates, many borrowers would be choosing to sign a mortgage with a fixed interest rate. In other words, they assume a somewhat higher price “but that provides them with greater peace of mind in the future.”

Therefore, and in October 2021, 59% of new hires did so with a fixed term interest rate and 18% with an initial fixed rate between one and ten years.

The AHE also points out that the data for the third quarter confirm the dynamism of new contracts in the mortgage market, favored by the improvement of the health and economic context and within a climate of “very favorable” financing conditions.

The AHE anticipates that this trend will continue in 2022, although he believes that it can manifest itself in a “more stable” way. In the third quarter, the number of mortgages constituted on homes was 53% higher than the same period in 2020 and 44% higher than the volume registered in the third quarter of 2019, although that period was affected by the entry into force of the LCCI 5/2019, as recalled by the AHE.

less credits

Regarding the evolution of credit, the AHE observes that credit resumed the deleveraging path of the last decade, with an interannual variation rate of -0.7%. This happens after the credit expansion experienced by the resident private sector during 2020 and early 2021. Periods with year-on-year growth in the outstanding balance above 2% due to the exceptional implementation of financial support measures for companies

Thus, the business segment registered a fall of 1.8% in the third quarter of 2021, which was partially offset by a 0.5% increase in the balance of households.

Specifically, household debt, in terms of its main asset (housing), remained positive for the second consecutive quarter, showing a year-on-year increase of 0.8%. And it is so after “more than a decade showing uninterruptedly negative interannual variations”.

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