Real estate experts predict improved interest rates mortgages in the second half after a good start to the year - Is 2021 the right year to mortgage? Beyond the financial situation and housing needs of each, the mortgage market is seeing a sharp spike in the number of operations in recent months, as reflected in the latest official statistics of the mortgages, in which it is revealed that the signature of credit for the purchase of housing has increased by 35.1% in march and 32.1% in April compared with the same period last year.

Thus, the statistics show that the volume of mortgages registered in April also exceeds the prepandemia figures, standing 10% above the data of April 2019, according to Ferran Font, director of Studies of Pisos.com. Meanwhile, the borrowed capital has grown almost 23% in the last 2 years, going from 3,600 million euros in April 2019 to 4,450 million in the fourth month of 2021.

"The latest data are very positive, growth is also recovering more or less steadily since August last year, and this year almost 32,000 mortgages on housing have been granted in April," says Font, who states that it would be necessary to go back to 2010 to find a similar behavior in the fourth month of the year, pointing to a much deeper movement in the sector.

Real estate experts predict improved interest rates mortgages

"Keep in mind that what is changing is the mortgage market, from January of this year the mortgage to fixed rate is the majority at the state level and represents almost 6 out of every 10 mortgages on housing," says the director of Studies Pisos.com in reference to the trend change in the interest rate of these loans, so that a 55.4% of the mortgages constituted in April were already fixed, and 44.6% remaining type variable.

” This situation is a consequence of the fact that they are referred to the euribor, which is at historic lows and, as a consequence, financial institutions can offer those customers who pass through their risk filters, they are usually offering them very advantageous conditions", says Ferran Font. In fact, the euribor, the index to which most mortgages refer, has started the month of June at an average of -0.485%.

For her part, María Matos, Director of Studies at Fotocasa, agrees to point out that banks are promoting credit recovery. "We hope to continue to see this improvement in mortgage data, as the banking sector has been working to promote this momentum, lowering prices to stimulate sales," he says.

Real estate experts predict improved interest rates mortgages

"We believe that the health of banks is crucial so that financing continues to reach the pocket of Spanish families, and these increases, in addition to being in line with the pace of sales transactions, are proof that banks face this crisis with healthy accounts and with a solid foundation", says the director of Studies of Fotocasa.

"In fact, in recent months, we have seen several entities with the largest price drops that are remembered to compete with the euribor. The good conditions of current interest reductions are causing many small savers to launch themselves to buy housing", adds María Matos, who highlights that the figures for April represent the second best figure since the outbreak of the pandemic and exceed the number of operations closed in 2018 and 2019.

In addition, the director of Studies of Fotocasa considers that these records are "continuous data that show us that we are on the path of recovery". Thus, his forecast for the rest of the year is optimistic. "We predict good numbers, because bank financing is the main access route for 7 out of 10 home buyers in our country," he adds.

Real estate experts predict improved interest rates mortgages

For Iván Terreno, head of Mortgage Banking at Housell, there are 3 phenomena that explain the increase in demand for mortgage credit, starting with mortgages that were not formalized in 2020. "The accumulation of operations due to the delay during the pandemic is still latent, since the situation led many people to change their purchase options," he says.

In addition, Terreno points, like the other real estate experts consulted, to the low price of the rates, highlighting especially the fixed rate mortgages, which it considers an extra motivation to borrow, and points to the achievement of herd immunity through vaccination against the coronavirus as a key factor for economic and real estate recovery, market stability and increased demand.

"For the rest of the year, we believe that this will be an atypical summer, also for the real estate sector. We believe that, since September we will see a bank more predisposed to grant mortgages. Good guys, banking blowing and a quieter society can translate into a record-breaking year in real estate, " adds Housell's head of Mortgage Banking.

Real estate experts predict improved interest rates mortgages

Beyond 2021, Guillermo Llibre, CEO of Housell, assures that the real estate recovery will have to wait several years and highlights the stability that is expected in the evolution of the rates. "The forecasts of various experts indicate that interest rates will remain very low, at least until the end of 2022, to encourage consumption over saving and help to get out of the crisis, with the beneficial effects for those who want a mortgage," he says.

Therefore, Llibre believes that we are at a good time for those looking to buy a home to consider mortgaging. "It is expected that 2021 and 2022 will be good years to borrow from the demand side, from the buyer, and the crux of the matter will lie on the seller side if we decide to sell properties with the right volumes to recover in transactions," says the CEO of Housell.

From Tecnocasa, its CEO, Paolo Boarini, affirms that the main risk indicators of mortgages remain stable, such as the ratio between the borrowed capital and the value of the home, between the mortgage payment and the income of the person requesting it or the repayment period. Also the reference on the type of mortgage contract, as reflected in the chart below, which shows that "it is very complicated for a person without a stable contract to get a mortgage", according to Boarini.

Real estate experts predict improved interest rates mortgages

Regarding the relationship between loan and value, Tecnocasa's latest real estate report shows that it closed the first semester at 73% and that it moves in a band of just 3 percentage points of fluctuation since the second half of 2014, which they consider "shows some temporal homogeneity in the credit criteria applied to mortgages by banks", according to the study.

As for the percentage of the mortgage income that absorbs the mortgage quota, the study points out the differences between the 70% that was reached in 2007, together with the explosion of the real estate bubble and the 32% registered in the last semester, which is about 5 percentage points more than in 2015, although Tecnocasa considers that this figure "reaffirms that we are in a conservative mortgage market".

Like Ferran Font, the ceo of Grupo Tecnocasa highlights the "significant increase experienced by the mortgages at a fixed rate of interest over the past semesters", pointing out that 6 years ago, this type of mortgages accounted for only 10% of the total, while in the first half of 2021 have reached 80%, while the variable-rate has gone up from 80% in 2015 to 15% in the first half of 2021.

Real estate experts predict improved interest rates mortgages

In addition, Boarini says that the average interest rate of mortgages fixed and variable moves around 1.6%, indicating that there is little difference between the current monthly payment of a mortgage to a fixed rate, which stood at 445 euros per month, and of a type variable, which closes the first half, 409 euros a month, which contrasts with differences of more than 100 euros recorded in previous years.

Tinsa, in turn, sets the average cost of a monthly fee, mortgage 581 euros, noting that the Spanish used half 20.3% of their family income available to tackle the first year of the mortgage, while the provinces of Malaga, the Balearic islands, Barcelona or districts in madrid, Salamanca and Arganzuela exceed that average state of financial effort mortgage.

Meanwhile, the average family income destined to pay a mortgage loan in the Community of Madrid is slightly behind the state average, with 19.9%, while the valuation company specifies that there are 8 provinces throughout the country that show a percentage of financial effort to meet a mortgage quota that does not exceed 15%, according to Tinsa figures.

Thus, the Balearic islands is the province with the monthly mortgage more expensive, of 801 euros, while in second and third place, respectively, are placed on Madrid, with a monthly average of 771 euros, and Barcelona, with 748 euros, while the monthly payments cheaper for the return of these loans are recorded in Castellón, Avila and Jaén, all of them under 350 euros per month.

# Real estate experts predict improved interest rates mortgages #