The cessation of lending is a reality that has been developing for months and has become more rare as the European Central Bank (ECB) continues to raise interest rates, the last of which was 25 basis points last month. in July. Concession conditions are maintained – up to 80% of the property price and the fees cannot represent more than 35% of household income, in most cases – but demand continues to decrease as a result of the increase in its price. product. financial. This was seen, above all, in the last four months and financial institutions began to respond by avoiding raising the prices of new loans despite the increase in the price of money.
Thus, the upward and downward movements seen, above all, in the case of fixed-rate home purchase loans until last June, were reduced in July and August, and only one of the major entities that moved in our country is changing. its commercial offer on its website. A similar situation occurs with mixed-rate loans, that is, those composed of a first part of a fixed rate – usually five or ten years long – and the second part of a variable rate – which includes among others the loans, the life of the loan–, and which is the product that has been signed the most in recent months due to the interest rate situation in the market.
Therefore, only ING increased the price of its fixed mortgage in these first days of September, from 3.75 TIN to 3.90%, while Openbank increased the price of mixed mortgage by more than a tenth during the summer, the numbers obtained after applying the maximum bonuses offered by each bank. Variable mortgage rate offers have also been maintained, with almost no change in their differences over the months.
The market is inactive
Preventing the rise in mortgage rates did not relieve the freeze that remains in the market and without the more recent official figures, those at the end of the second quarter show a market of new production focusing on inactivity. Specifically, the number of home loans decreased for the fourth consecutive quarter, reaching 93,557 between April and June, representing a decrease of 14.5% compared to the previous quarter.
But not only the total number of loans is reduced, the number of purchases and sales without using loans also increases, which reduces the business of the bank. Thus, the quarterly percentage of registered mortgages in registered housing sales also decreased significantly, especially by 6.4 percentage points during the last quarter, which reached a proportion of registered mortgages of registered sales.
Offers to attract customers
With this situation as a backdrop, banks have chosen not only to contain prices, but also to launch offers that allow them to attract new customers, as has been done for many years with other types of financial products.
So, just a few days ago, Openbank gave the starting signal of what appears to be a new battle for the customer. The Santander Group subsidiary launched a promotional offer offering 350 euros to customers who take out a loan of more than 100,000 euros. The conditions of this promotion are maintained for loans contracted between the previous September 1, and the next January 31, 2024. The Banco Santander digital entity requires the client to register through a website with a code from the promotion as an essential requirement.
The entity’s catalog shows, according to its website, variable mortgages with a difference from 1.10% and can be reduced to 0.60% if all the discounts are applied. In the case of fixed rate mortgages, the APR starts at 3.76% and can be reduced to 3.56% with relevant discounts. Finally, those of a mixed type have a price after TIN bonuses of 2.63% for the first ten years and a difference in Euribor of 0.55% for the rest of the life of the mortgage loan.
The outstanding balance falls
The cessation of new mortgage contracting, added to the increase in payments of this type of loans that occurred since last winter as a result of the increase in interest rates, led to a decrease in the outstanding balance of loans for the purchase of residences that are available to Spanish families.
So, according to data from the Bank of Spain, at the end of July the outstanding balance of housing loans was more than 500,000 million euros, as can be seen in the attached graph, a figure that decreased by almost 20,000 million of euros since. in the same month last year, a very significant drop in the historical series.
This figure is far from the maximum reached in 2010, when the outstanding balance exceeded 680,000 million euros, according to data managed by the national banking regulator.