The Spanish mortgage market is undergoing an unprecedented transformation. For decades, taking out variable-rate loans linked to the Euribor was the majority option among citizens. However, recent years have completely changed this trend, bringing Spain closer to the reality of other European countries where the stability of the fixed rate is the norm.

A technical tie that marks a turning point

According to the most recent data from the Spanish Mortgage Association, the stock of outstanding mortgages is almost evenly split: 42% are fixed-rate, compared to 43% that still have variable rates, while the remainder corresponds to mixed formulas. This figure is especially significant when we consider that just eight years ago, only 7% of loans were signed under this modality.

Banks accelerate the model shift

CaixaBank, which controls approximately a quarter of the mortgage market, is a clear barometer of this evolution. Before 2012, only 10% of its mortgages were fixed-rate; last year, the figure soared to 93%. In terms of the total portfolio, this means there are now 50 billion euros more in fixed-rate loans than four years ago.

The price war as a catalyst

Fierce competition among entities has been key to making these mortgages cheaper. During the last fiscal year, some banks even offered high-income clients loans at 2% APR over 30 years, a price even lower than the swap, which is the cost the entity assumes to cover the operation. Entities such as Ibercaja, Kutxabank, and Unicaja tied these offers to the contracting of up to six additional products, while CaixaBank and Sabadell opted for more aggressive conditions with less cross-selling, according to the analysis firm Inteliens.

No signs of a bubble, but with historical data

Despite the dynamism, the Bank of Spain rules out bubble risks: real home prices are 18% below 2007 levels, and household debt remains at reasonable levels. Last year, 643,870 mortgages were constituted, the highest figure in a decade, although far from the 1.76 million in 2007, when only 2% were fixed-rate.

Riskier loans and average financing

Mortgages exceeding 80% of the appraisal value are considered higher risk, but they only represent 15.6% of the total, compared to the peaks of the boom. Among the six largest listed banks, this portfolio amounts to 32 billion euros. Banks finance on average 68% of the appraisal value, with an average interest rate of 2.86% for variable rates and 2.83% for fixed rates, according to the INE. This places Spain as one of the markets with the cheapest mortgages in Europe, only surpassed by Malta and Bulgaria.