Rising rates cause biggest drop in mortgage lending in decade in 2023

Mortgage lending is set to have its worst year in a decade in 2023. The National Institute for Statistics released its annual results for the mortgage market this Thursday and confirmed the impact of rising interest rates on key bank financing businesses. The number of new mortgages and equity issued by entities fell by 17.7% and 19%, respectively, in both cases reaching their worst records since 2013.

The data contrasts with record highs since the financial crisis. In absolute numbers, 381,500 home mortgages were issued last year, representing a 17.7% decline from 2022’s extraordinary record. The figures are still high on pre-pandemic levels, but this is the worst annual evolution recorded since 2013, when Spain was. He was experiencing a severe financial crisis.

The evolution is repeated in terms of the volume of borrowed capital. According to records published by the INE, there are 54.2 billion euros. The drop in this case is somewhat more pronounced, as it exceeds 19%. Again, you have to go back a decade to see a steeper drop than 2023. Even in the year of the pandemic, it did not have such a strong impact.

The combination of both data also shows a decrease in the average amount of mortgages issued by financial institutions. This figure remains at €142,000, compared to the €144,000 average seen a year ago. Despite the decline, this is the second-highest rate in the entire historical series since 2007.

Behind these records is the coincidence of the biggest rise in interest rates seen in Europe in years, which has caused the demand for funding to freeze. The increase in prices is confirmed by the statistics published by INE this Thursday. The average loan was signed with an interest rate of 3.12%. This is the highest rate since 2016 and the second year of increases after eight years of continuous price declines.

Source: El Diario

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