Mortgage renegotiations more than double until November, adding 4.3 billion euros

MADRID, 28 Ene.

Mortgage renegotiations more than double until November, adding 4.3 billion euros


Mortgage renegotiations increased by 166% between January and November 2023, compared to the same period in 2022, adding 4,327 million euros in the volume of new mortgage operations, according to data published by the Bank of Spain and collected by the Spanish Mortgage Association in its newsletter corresponding to the third quarter.

The association points out that within the sluggishness that the mortgage market is experiencing, the "growing increase" in loan renegotiations stands out. Thus, on the one hand, the activity of new loans constituted on homes has experienced a drop of 20%, while renegotiations have "almost tripled."

In this way, in the first eleven months of 2023, renegotiations represent 8.5% of new operations, compared to the 3% they represented in the previous two years. This proportion has risen in November, when renegotiations were 11%.

In fact, in the eleventh month alone, 558 million euros were recorded in renegotiations, 34.7% more than in October and 52.0% more than in the same month of 2022.

"This phenomenon would be supported by the general rise in interest rates, which has favored the conversion of the mortgage modality, from variable to fixed, supported in turn by the measures established in Royal Decree-Law 19/2022 , which reduce or even cancel the compensation costs associated with this type of modification of the contractual conditions," explains the AHE.

Among other data, the bulletin highlights the evolution of mortgages by interest rate, whether fixed, variable or mixed. In this sense, the AHE highlights the growing trend that has been maintained, since mid-2022, in the contracting of mixed mortgages, those where a fixed rate is offered for a period of more than one year and less than ten years, and subsequently a rate variable.

In particular, the AHE highlights the increase registered in originations that establish an initial fixed rate between five and ten years, which have gone in just a year and a half from representing 4% of operations to recording a share of 17%.

Thus, this category, together with the one that includes an initial fixed rate for up to five years, concentrated more than 40% of new hires until November 2023.

For its part, the other modality that brings together a "substantive" volume of operations are fixed mortgages, which account for 43% of new loans for home acquisition. However, the AHE indicates that this modality has reduced its share "considerably" since June 2022, when the official interest rates of the European Central Bank (ECB) were still at reduced levels, since this modality accounted for 67%. of new originations.

Finally, the association explains that the monetary normalization process has given continuity to the dynamics that were already occurring in variable loans, that is, "those in which the rate remains fixed for a maximum of one year, with only 16 % subscribed under this modality" in November 2023.

However, he highlights that this category, very popular in the Spanish mortgage market before the real estate crisis, "continues to have a relevant weight in the portfolio of around 55% of the outstanding balance."