The mortgage firm sinks 24% in May with the highest rates since 2017

The signature of new mortgages for the purchase of a home sank 24% in the interannual rate in May, its biggest decrease since January 2021, and the average starting interest rate was 3.15%, the highest since April 2017, according to data released by the National Institute of Statistics (INE).

With the new decline in May, which has worsened compared to the previous months, the firm of new home mortgages has chained four consecutive months of decline in a context marked by the rise in interest rates to curb inflation and the consequent increase in the cost of financing.

In May, 33,398 new home mortgages were recorded. Despite the drop compared to a year earlier, the home mortgage firm shows a month-on-month rise of 23.5% compared to the previous month, April. However, so far this year it has accumulated a fall of 12%.

After the 8.8% drop recorded in December 2022, the home mortgage firm started the year with a rise of close to 3%, however, after it fell, more and more accentuated: -2% in February, -15.7% in March, -18.3% in April and -24% in May

Highest interest rate since 2017

The average interest rate on new home mortgages rose more than one point from the previous year to 3.15%, its highest level for six years, and the average term stood at 25 years. Specifically, the average interest rate at the start was 2.79% for variable-rate home mortgages and 3.4% for fixed-rate ones.

In May, 62% of the mortgages on homes constituted were at a fixed rate and the remaining 38% at a variable rate.

An average amount of 140,000 euros

The capital borrowed to acquire a house exceeded 4,735 million in May, 27.5% less than in the same month of 2022 but 27.8% more than last April. So far this year it has fallen by 13.3%.

In addition, the average amount of a home mortgage stood at 141,798 euros in May, 4.6% less than the same month of the previous year. However, compared to the previous month it grew by 3.5%. Even so, in the first five months of 2023, the average amount accumulates a fall of 1.6%.

Mortgages constituted on homes concentrated 65% of the total capital lent in the month of May.

In addition, the total number of mortgages with changes in their conditions registered in the property registers was 12,414, 9% less than the previous year.

In May there were 9,796 novations, 13.3% less. For its part, the number of operations that change entities increased by 10.4% and the number of mortgages in which the owner of the property changed increased by 19.5%.

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

The Euribor was the rate to which the highest percentage of variable-rate mortgages referenced, both before the change (80.9%) and after (58.8%).

After the change in conditions, the average interest on variable-rate loans increased 0.3 points and that of fixed-rate mortgages rose 0.3 points. Mortgages on housing fell in all communities except in Cantabria (6.5%) and Asturias, where they did not change.

The greatest decreases occurred in the Canary Islands (–42.4%); Galicia (–36%); Balearic Islands (–34.3%); Madrid (-31%) or Catalonia (-30.6%).