Four out of ten houses bought in Galicia were paid for without asking for a mortgage

Tightening of monetary policy European Central Bankwith eight interest rate hikes in just eleven months (the ninth, if there is no change in the scenario, will come at the end of this month), raised the Euribor above 4% and sunk the signing of new mortgages. In some cases, due to the inability of potential buyers to afford the higher acquisition fees they would have to pay living place that they are interested in (and without the safety net that fixed rate loans have offered until now). In other cases, due to increasingly demanding conditions set by banks in order to avoid the risks of future non-payment.

Namely, according to data from college of registrars, the real estate mortgage company fell more than 24% in May, when 32,043 loans were formalized, compared to 42,311 in the same month of the previous year. IN Galiciathe trend is even more pronounced since financing operations for the purchase of apartments fell by 31.5%, the fourth largest drop in the entire country, after Extremadura, the Balearic Islands and the Canary Islands.

Some data that contrasts with that of home sales, which is holding up much better, with a fall of only 3.4% in Galicia in May (almost ten times less than the fall in the mortgage company) and 6.7%, almost double, in the national average.

And that is that in the whole of Spain in May more than 54,000 house sales were formalized, but only 32,000 included a mortgage, which means that another 22,000 (41% of the total) were paid in cash. A year ago, that percentage barely reached 27%.

In the case of the community, according to the registrar’s statistics, the jump was even more abrupt, as the percentage of randomly purchased houses returned from 18% in May 2022 to 42% in the same month of this year. financial year, in which 651 operations were carried out without the need for bank financing, either due to accumulated savings that are invested in housing for returns that bank deposits do not offer, reinvestment after the sale of a second house or family loans, among other possible causes.

Something that shows that, at this point, the transmission of monetary policy is not fully effective in its goal of cooling consumption and thus inflation. In fact, far from falling, house prices continued to rise during the second quarter, rising 1.1% between April and June compared to the previous three months and 5.7% year-on-year, according to a barometer published yesterday by the real estate portal photo house.

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President of the Galician Real Estate Association (agalin), Carlos Debasaconfirms that this change in trend can be seen in the offices of his associates, and attributes it prohibition of savings during the pandemic and in the following months, which is now occurring to a greater extent as other buyers are withdrawing, more affected by the rise in Euribor. Therefore, the drop in sales was very moderate, especially, indicates the expert, who reminds that the variation is calculated for the year, 2022, in which there were record transactions, so they do not appreciate any alarm signals in the market.

For his part, his colleague from the Galician Federation of Real Estate Companies (Fegein), Benito Iglesiashighlights the effect housing lawwhich is why some owners who had apartments in lease rather they put them in the circle of commercialization. This, he says, has attracted small depositors who are looking for investment opportunities in the real estate market that bring them returns that they do not get from bank deposits.

Profile of Galician mortgage borrowers: more than 41 years old when they sign the loan and 3200 euros of income

The growth of the Euribor significantly increased the price of mortgages. The installment of a variable loan of 150,000 euros for 25 years, with a difference of 1%, has risen from 677 euros in June last year (when the ECB had not yet started to raise interest rates) to 877 euros, which they will have to pay now if they have a scheduled annual review.

This has also caused variations in the mortgage profile, as confirmed by the mortgage brokerage platform Gibbons Allbankswhere they point out that the people of Galicia went from allocating 11% of their income for housing loan repayment in January 2022 to 19% at the end of the year, and now that figure already exceeds 25%.

As for the applicant profile, Galicians need more time to make the leap to buy a house, because the average age of signing a mortgage is 41.1 years in the community, compared to 39.7 in all of Spain. Income reported to the bank for access to financing exceeds 3,200 per month on average.

The average value of mortgaged real estate in Galicia is 183,882 euros, but if subrogations are deducted and only new loans are counted, the figure rises to 185,025 euros. The most loans were signed in A Coruña and Pontevedra, where the average is over 190,000, compared to 146,800 in Ourense and 140,000 in Lugo.

In Galicia, 92% of requested mortgages are for financing the purchase of the main home (two points more than in Spain), while only 6% are requested for the purchase of a second residence and 2% for investment.