July 13, 2024 | 5:29

Bizkaia

Mortgage war reduces prices to historic lows in 18 months

Mortgage war reduces prices to historic lows in 18 months

Jeickson Sulbaran

June 10, 2024 | 11:10 a.m.

The mortgage market in Bizkaia experiences significant relief, with interest rates at their lowest level since 2023

Mortgage activity in Bizkaia has taken a notable turn. After a year of contraction, banking entities have intensified their competition,or that has resulted in a historical reduction in prices of mortgages. According to the latest data from the Bank of Spain, in April 2024, the average APR of new operations stood at 3,60%, the lowest since January 2023, and below the Euribor, which in the same month marked 3,703%. This drop in prices is a clear indication of the recovery of the sector and the better conditions for applicants.

Financial institutions have adapted their strategies, offering better conditions to a greater number of clients. This not only includes a reduction in interest rates, but also the flexibility in the type of loans and the expansion of associated financial products. Competitiveness has led to a broader and more accessible offer, benefiting those with greater solvency and a stable relationship with the entities.

The impact of the ECB's monetary policy and the market response

The European Central Bank (ECB) has played a crucial role in this recovery. For two years, the mortgage market suffered a progressive increase in prices due to the rise in rates to control inflation. In December 2021, the average APR on mortgages was 1,499%, while in September 2023 it reached a peak of 4,109%. However, the ECB's subsequent rate cut, although moderate, has contributed to a change in market dynamics.

Mortgage war reduces prices to historic lows in 18 months

Supply and demand have adjusted to these new conditions. Despite only a 0,25% cut by the ECB, the mortgage market has shown signs of revitalization. There has been no significant increase in defaults, which has also boosted confidence among loan applicants. Better offers, along with the expectation of stability in interest rates, have boosted demand for mortgages, reflecting a more active and optimistic market.

The growth of credit and business financing

Between January and April 2024, Mortgages worth 20.136 million euros were signed in Bizkaia, an increase of 13,78% year-on-year. This growth contrasts with the 17,99% drop recorded the previous year. In April alone, contracts reached 5.778 million euros, the highest figure since July 2022.

The revitalization of the mortgage market is not an isolated phenomenon. In the same period, consumer credit reached 11.993 million euros, with an increase of 19,38%, while financing to companies rose by 7,11%, totaling 114.407 million euros. This growth on all financing fronts reflects a broader and stronger economic recovery.

Refinancings have decreased, representing only 5,38% of the money drawn down on mortgages in April, compared to 11,1% last November. Although the figures for 2024 are lower than those of 2022, the growth trend is clear. The need for entities to compensate for the drop in rates with greater volume of operations is energizing the market.

The mortgage market in Bizkaia shows a notable recovery, with prices at historic lows and a more accessible offer. The monetary policies of the ECB and the competitiveness between entities have created a favorable environment for mortgage applicants, marking a new stage of growth and stability in the sector.

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