Spain | Mortgage rates decrease by 10% at the start of the year, reaching nearly decade-high interest levels

The mortgage firm in Spain started the year with a 10% drop compared to January 2023, reaching 33,128 loans, according to data from the National Institute of Statistics (INE) published this Tuesday. The focus is on the average interest rate, which continues to rise and is now at 3.46%, its highest figure since December 2014.

This year-on-year drop in January means that the home mortgage firm has now experienced 12 consecutive months of negative rates, though this decline is less pronounced than the previous month. The average amount of mortgages for homes decreased by 2.7% year-on-year in January, reaching 138,149 euros, while the capital lent decreased by 12.7% to 4,576.5 million euros.

As a result of the rate policy adopted by the European Central Bank (ECB) to combat inflation and the Euribor’s evolution, the average interest rate for mortgages on homes was 3.46%, with an average term of 24 years. About 42% of mortgages in Spain were taken out at a variable rate in January, while 58.2% were fixed-rate mortgages.

In terms of inter-monthly rates, home mortgages increased by close to 33% from December 2023 to January 2024, while the loaned capital increased by 30.7%. The general secretary of the Association of Builders Promoters of Spain noted that there has been a trend towards moderation in mortgage financing due to rising financing costs.

The autonomous communities with the highest number of home mortgages in January 2024 were Madrid, Andalusia, and Catalonia. However, 14 regions of Spain saw fewer mortgages on homes than in the same period in 2023, with notable declines in Asturias, Navarra, Cantabria, and Andalusia. There were increases in Madrid, Galicia, and Aragón.

Furthermore, the total number of mortgages with changes in their conditions in the property records decreased by almost 6% in January year-on-year. Modifications within the same institution and changes in ownership both decreased, while entity changes grew. The number of mortgages on rural and urban properties fell by 11.1% in January compared to the previous year.

Experts predict that 2024 will be a year of changing mortgage interest rates, with access to housing improving as the conditions for mortgage credit ease. A new mortgage war is expected between financial institutions, leading to increased competition and possibly the return of fixed mortgages in the market.

By Samantha Robertson

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