Mortgages: Mortgage Law Effect? Loans plummet, recording worst data in 5 years

Real estate slowdown or conjunctural effect of the entry into force of the new mortgage law last June? The market of the purchase and sale as well as that of the mortgage firm have been showing sharp declines in the last two months in the statistics of the National Statistics Institute (INE) that show data on operations -both sales and mortgage financing- signed two or three months before.


Mortgage loan

Mortgage loan

Specifically, the number of mortgages constituted on homes registered in the property registers stood at 22,488 last September, a figure 31.6% lower than that of the same month of 2018 and the lowest in a month of September since 2014, according to data from the INE that indicates how the entry into force of the Real Estate Credit Law last June “could have affected” the September data when this statistic included the public deeds made in previous months.


The sale of houses registers its worst September in three years after falling 12%

home loan

Agencies The sale of homes fell 12% in September in relation to the same month of 2018, to add 37,995 operations, its lowest figure in a month of September since 2016

With the year-over-year decline seen in the ninth month of the year, the home mortgage firm is chaining two consecutive months of declines after plunging nearly 30% in August. According to data released by the INE, the average amount of home mortgages rose 5.3% compared to September 2018, to 135,452 dollars , while the capital loaned fell 28% year-on-year, to 3,046 million dollars .

In monthly terms (September over August), on the other hand, the number of mortgages on homes rose 10.3%, its second smallest increase in this month after 2017. On the other hand, the capital loaned for this type of mortgage it advanced 16.3 % in the month, its smallest increase in a September in at least five years.

It must be remembered that with the entry into force of the new regulations, the deadlines for signing a mortgage have been extended over time, without taking into account the problems of adaptation to the new law by both financial institutions and notaries, which It generated a bottleneck in the first weeks of the law.

For example, the client must receive all the information related to his mortgage, at least 10 days before the deed, a period designed so that the future mortgaged can consult and ask any questions about the loan that he is about to sign. Likewise, with the new rule, the client will visit the notary twice, which also delays the terms when signing a mortgage.


Housing market is slowing down

Housing market

However, experts agree that the housing market is slowing down and everything indicates that in 2019 it will close with activity levels in mortgages very similar to those of 2018, with figures close to 345,000 registered mortgages and “it will be normal that in the coming months , negative data will continue to be recorded in this statistic in its year-on-year comparison, but the housing market will continue to grow, although at a slower rate than it did in recent years, ”recalls Kardoudi.

In general, “we are witnessing the moderation in the growth of the real estate market that we were already predicting for 2019. What remains to be seen is whether this process will be more or less intense due to the evolution of the macroeconomy, the international context, the current political situation in Spain and the latest legislative changes ”, he adds.

In other words, it remains to be seen whether the declines, both in transactions and mortgages, have really been due to the entry into force of the law or due to the first symptoms of exhaustion of the residential market.