According to data from the Bank of Spain provided by the Spanish Mortgage Association (AHE), the average rate at which Spanish entities granted loans for mortgages fell to 1,663% in October, compared to 1.7% in September and 1.806% a year earlier.
This is the third consecutive monthly drop in the average rate of mortgage loans over three years for the acquisition of free housing granted by entities in Spain, after the slight rise experienced in July, when it broke a streak of four consecutive months of falls when rising to 1,745%, compared to 1,744% in the previous month.
On the other hand, the average rate of mortgage loans between one and five years, for the acquisition of free housing, granted by credit institutions in the euro area (referring to the previous month) remained at 1.61%.
In this scenario, the Euribor, the index to which most Spanish mortgages are referenced, deepened its fall in October and marked a new historical low of -0.466, compared to -0.415% in September.
The deputy governor of the Bank of Spain, Margarita Delgado, has recognized that the new mortgage law, launched in June last year, may restrict access to home ownership to some groups with low incomes because it forces them to comply with some strict standards in analyzing clients’ ability to pay.
“Without a doubt, one must be especially careful when granting new operations, but we must assume that, inevitably, the application of strict standards, as required by law, may restrict access to home ownership to some low-income groups” , has indicated during his speech at a conference on the post-Covid mortgage market organized by Adicae.
Current mortgage law requires an in-depth assessment of the creditworthiness of the potential borrower, guarantor or guarantor before entering into a loan agreement. Delgado believes that “it should never be forgotten” that the fundamental element that must be considered in granting a loan is not the value of the collateral, but the borrower’s ability to pay.
“The Law makes it very clear that the value of the guarantee should not be the primary factor when granting financing,” stressed the deputy governor of the Bank of Spain.