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Mortgage Approvals Increased in October

Mortgage Approvals Increased in October
Mortgage Approvals Increased in October

There were 24,706 new home loans in October

The number of new home mortgage approvals in October was just short of twenty-five thousand (24,706). This is 8.2% more than in the same month in 2016. The average amount of the new mortgages was 120,628 euros, an annual increase of 9.2%.

The value of mortgages for urban property reached a massive 4,824.9 million euros. This is a huge 28.8% more than in October 2016. When looking only at housing, the borrowed capital reaches 2,980.2 million euros, an increase of 18.2%, year-on-year, according to data from the INE.

When comparing to the previous month, the variation for all new mortgage approvals is -15.9%. Looking only at mortgages for homes, the monthly variation is -18%.

Interest Rates

For new mortgages taken in October, the average interest rate at the start of the term is 2.66% (13.1% lower than in October 2016) and with an average duration of 23 years. 65.6% started with a variable rate, and 34.4% were at a fixed rate.

The average interest rate at the start of the term was 2.41% for a variable rate mortgage (19.5% lower than the previous year) and 3.36% for fixed rate mortgages (2.7% higher than the same month last year).

Analysing only mortgages for homes, the average interest rate is 2.67% (15.6% lower than in October 2016) with an average term of 24 years. 63% of mortgages on homes began with a variable rate and 37% at a fixed rate. The number of mortgages at a fixed rate experienced an increase of 17.6% year-on-year.

The average interest rate at the beginning is 2.48% for variable-rate home mortgages (with an annual decrease of 21.2%). For fixed-rate home mortgages the average is 3.09% (3.7% lower).

Results by autonomous communities

The communities with the largest number of mortgages constituted on housing in October are Comunidad de Madrid (5,168), Andalucía (4,847) and Cataluña (3,998).

The communities with the highest annual variation rates are La Rioja (87.0%), Comunidad de Madrid (31.2%) and Galicia (22.1%).

The most capital lent for mortgages on housing was in the Community of Madrid (859.5 million euros), Catalonia (575.5 million) and Andalusia (492.2 million).

The only communities with positive monthly variation rates in the number of housing mortgages are La Rioja (70.4%), Cantabria (7.8%) and Extremadura (0.2%).

Those with the lowest monthly rates are Aragón (-31.9%), Comunitat Valenciana (-30.0%) and Región de Murcia (-24.0%).

The level of new mortgage approvals is far from the levels seen in the boom years mainly due to tighter solvency controls that now apply to the banks. Additionally, the number of purchase transactions is much higher than the number of mortgages. This means more people are purchasing a property without financing.

Using today’s mortgage data, and used in conjunction with the INE sales figures, more than 30% of property purchases that closed in October were made without a mortgage.