Spanish banks have tightened the issuance of mortgages—loans are denied, the demand for apartments is falling

Spanish banks have tightened the requirements for issuing mortgages; this year, the number of housing-related loan rejections has significantly increased. This is reported by the Spanish newspaper “La Vanguardia.”

In the first months of 2023, the number of home loan denials increased by 22.7% compared to the same period in 2022. That's the data shared by Trioteca, a digital platform that handles mortgage loans from 37 financial institutions. “Poor people can no longer afford mortgages,” admits Ricard Garriga, CEO of the platform. 

Curiously, until last year, the situation was the opposite: there was a “commercial” war between banks over the issuance of mortgages. 

According to the director of the analytical department of the real estate agency network Tecnocasa, Spanish banks have become less flexible in issuing mortgages and do not give loans with a contribution of more than 30% of the borrower's income. 

It is pointed out that the majority of mortgage recipients—80.7%—are employees with an indefinite term employment contract, 14.6% are civil servants, and only 4.7% are self-employed (a year ago, individual entrepreneurs accounted for 9.4% of approved mortgage petitioners).  

How squatters are occupying houses in Spain: a lawyer's commentary and the real story

As a result, families in Spain are forced to either refuse to buy a home or buy cheaper apartments. According to Idealista, in February this year, the average mortgage loan amounted to 178,000 euros, which is 4% lower than last year, while the average price of the house they bought was 239,144 euros, — 8% lower than the previous year.

As for the demand for housing, the company Tecnocasa reported that in February they had 181,500 requests for housing, which is 10% less than in February last year. They predict that demand will fall further if interest rates continue to rise.

Demand is falling, especially in cities such as San Sebastián, Palma, Barcelona, and Madrid, and least of all in Lerida, Zamora, Avila, or Huelva, where housing is still more or less affordable.