The European Central Bank decided a year ago to change the course of its monetary policy and make it more restrictive in order to curb high inflation. Since July 2022, the body has raised rates nine times, that is, at all meetings held. One of the goals of the most restrictive monetary policy is to tighten credit in order to induce less consumption, slow down the economy and, as a result, reduce inflation. And it’s starting to show up. 38.4% of home purchases in the second quarter of the year were made without a mortgage..

Total from April to June of this year 93,557 mortgage loans, according to the Registrars, which represents a decrease of 14.5% compared to the previous quarter and, therefore, the four quarters with falls are related to each other. This total mortgage loans represent 61.6% of the 151,983 home sales made in the second quarter, a 5.6% drop.

The decline in mortgage activity (-14.5%) was much more intense than the number of home sales (-5.6%). “allowing to notice the intensive growth of the price of money (interest rates)”, – the Registrars note. Consequently, the percentage of mortgage-backed sales also declined significantly, notably by 6.4 percentage points over the last quarter, reaching a mortgage-backed sales coverage level of 61.6%. This coverage index is the lowest since the first quarter of 2014, leading to a high percentage of non-mortgage financed sales in the most recent quarter (38.4%).

Rising interest rates cause a decrease in mortgage activity, creating a greater need for own funds to participate in the purchase process. This situation creates a reduction in the sales market itself, “to the point that it becomes more inaccessible to those applicants who do not have the required level of savings,” they explain.

This percentage is the Spanish average, so there are differences between the communities. In fact, it can be seen that in the communities with the highest housing prices, a higher percentage is financed by mortgages. In the Basque Country, only 3.9% of home purchases are made without a mortgage. in the Community of Madrid – 19.7%. These two communities, along with the Balearic Islands, have the highest recorded housing prices, so it’s more normal that there is more funding.

The average price per square meter in Madrid was 3299 euros., highest; It is followed by the Balearic Islands with an average price of 3214 euros per square meter. In this community, 37.3% of home sales were made without a mortgage. The third position was taken by the Basque Country with an average price of 2943 euros per square meter. “Price levels are generally critical to the need for more or less mortgage financing in the process of buying and selling a home,” the Registrars note.

On the other hand, there are eight communities that account for less than 60% of total mortgage sales. It was in the Valencian Community that more houses were bought without a mortgage – 56.3%. There were 25,114 home sales in this region, less than half, or 10,974, were made using mortgage financing. In this community, the average house price was 1,482 euros per square meter, up 2.6% from the previous quarter.

In the Canary Islands, 48.9% of home sales did not require mortgage financing. It should be noted that the average price per square meter in the Canary Islands in the second quarter was 2344 square meters, which made it the fifth most expensive community.

There is also a noticeable increase in home purchases without mortgages in annual terms. Over the past year, 31.58% of sales were made without mortgage financing. Fifteen Autonomous Communities experienced an inter-annual decline, which confirms the general change in the trend of mortgage activity from a territorial point of view during the last year. The Autonomous Communities with the highest number of mortgages in the past twelve months were Andalusia (86,954), Catalonia (75,810), Community of Madrid (72,588) and Community of Valenciana (50,331). “Over the coming quarters, the downward trend in mortgage lending activity is expected to continue,” they predict from the Registrars.