The mortgage firm plummets 24% in May, the biggest drop since 2021

The number of mortgages constituted on homes plummeted 24% last May with the signing of 33,398 loans in what is the largest in a month since January 2021, in a comparison in that precise month highly affected by the comparison of a pandemic environment to a pre-pandemic one.

With the year-on-year decline in May, the home mortgage firm chains four months of negative rates after the 2% drop recorded in February, the 15.7% drop in March and the 18.3% drop in April, according to data regularly published by the National Statistics Institute (INE) and collected by Europa Press.

The average amount of the mortgages constituted on homes fell by 4.6% year-on-year in the fifth month of the year, to 141,798 euros, while the capital lent decreased by 27.5%, to 4,735.8 million euros.

By autonomous communities, those that registered the highest number of mortgages constituted on homes in May were Andalucía (7,111), Cataluña (5,759) and Madrid (5,078).

Likewise, the regions in which more capital was lent for the constitution of home mortgages were Madrid (1,080.8 million euros), Catalonia (922.8 million) and Andalusia (840.5 million).

Only in one community, Cantabria, more mortgages on homes were signed last May than in the same month of 2022, with an advance of 6.5%, while in Asturias there was no variation. In the rest of the regions there were interannual decreases, especially in the Canary Islands (-42.4%), Galicia (-36.4%) and the Balearic Islands (-34.3%).

On a month-on-month basis (May over April), home mortgages jumped 23.5%, while borrowed capital increased 27.8%.

In the first five months of 2023, home mortgage loans have fallen by 11.9%, with a 13.3% decrease in borrowed capital and a 1.6% decrease in average capital.

THE INTEREST RATE SOARS

After the rise in interest rates agreed by the central banks to try to contain inflation, the average interest rate for all mortgage loans stood at 3.5% in May, with an average term of 23 years.

In the case of homes, the average interest was 3.15%, with a rise of 1.34 points compared to the same month of 2022 and with an average term of 25 years.

38% of mortgages on homes were established last May at a variable rate, while 62% were signed at a fixed rate. The average interest rate at the beginning was 2.79% for variable-rate home mortgages and 3.40% in the case of fixed-rate ones.

The INE reviewed the statistical series of interest rates since January 2020 a few months ago after launching a new procedure to validate the results of the initial average interest rate in the mortgages constituted.

According to data from the statistical agency, the number of mortgages on rural and urban properties (within the latter include homes) fell 22.4% in May compared to the same month in 2022, to a total of 44,297 loans.

The capital of the mortgage loans granted decreased by 19.7% in the fifth month of the year, to 7,283.7 million euros, while the average amount of the mortgages constituted on the total number of properties increased by 3.4% and totaled 164,430 euros.

Last May, a total of 12,414 mortgages changed their conditions, a figure 9% lower than that of the same month of 2022. Considering the type of change in the conditions, there were 9,796 novations (or modifications produced with the same financial entity), with an annual decrease of 13.3%.

The number of operations that changed entities (subrogations to the creditor) was 2,096, 10.4% more than in May 2022. For its part, in 522 mortgages the owner of the mortgaged asset changed (subrogations to the debtor), 19.5% more than a year earlier.

Of the 12,414 mortgages with changes in their conditions, 36.4% are due to changes in interest rates. After the change in conditions, the percentage of fixed interest mortgages increased from 13.4% to 37.4%, while that of variable interest mortgages decreased from 85.6% to 61.3%.

The Euribor is the rate to which the highest percentage of variable-rate mortgages refer, both before the change (80.9%) and after (58.8%). After the modification of conditions, the average interest on loans on variable-rate mortgages rose 0.3 points, while that on fixed-rate mortgages also increased 0.3 points.