The mortgage market has reactivated during 2024 after the slowdown recorded last year in a context of rising interest rates, according to data collected by the Bank of Spain.

Specifically, between January and August, banks granted loans for home purchases totaling 41.658 billion euros, representing an increase of 12.4% compared to the 37.067 billion euros granted in the same period of 2023.

In absolute terms, the loan issuance data between January and August were 6.8% lower than in 2022, when 44.721 billion euros were recorded. Excluding this year, the volume granted is at its highest level since 2010.

Regarding August data alone, banks granted 3.667 billion euros in loans, 44.9% less than in July, as is typical for the most vacation-heavy month of summer, although year-on-year the volume increased by 1%.

However, new mortgage loans granted in August did not offset repayments, so the outstanding mortgage stock stood at 495.170 billion euros in August, two billion less than in July. In any case, the outstanding credit so far this year has increased by 184 million euros, according to data from the financial regulator.

Regarding interest rates, the TEDR rates published by the Bank of Spain (which do not include related expenses such as insurance premiums or fees that compensate direct costs) stood at 3.38% for mortgage loans granted in August, with a marginal increase compared to July (four basis points) and a drop of half a point compared to last year. Despite this 55 basis point decrease, rates remain above the average of the last decade.

Thus, the weighted average interest rate of the outstanding mortgage balance was 3.60%, two basis points below July. Compared to August 2023, the rate increased by 16 basis points.

The market reacts to the interest rate cuts