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Mortgage market plummets: home purchase loan signings plummet 29.6% in September

In a clear indication that the housing market fever has come to an end, the number of mortgages signed in September experienced a dramatic drop of 29.6%. This data reveals a significant change compared to the boom recorded in 2022, when 463,614 transactions were closed, marking the highest figure since 2010. 

Now, we find ourselves with figures that resemble those of the pre-pandemic era, fluctuating between 22,000 and 35,000 mortgage loans. Juan Villén, CEO of Idealista Hipotecas, points out that this trend is likely to persist for the rest of the year. Although the drop in the volume of transactions compared to the previous year could soften towards the end of the year, this is due more to the contraction that began after the summer of 2022 than to a genuine recovery in the market. 

Access to financing for home purchases has become more expensive and complicated, a result of the rate hikes implemented by the European Central Bank since July last year and a Euribor (benchmark for most variable mortgages) that is above 4%. The average interest rate on loans taken out in September, with an average term of 24 years, continued to rise, reaching 3.26%, the highest figure since February 2016. 

This is the sixth consecutive month in which the interest rate has exceeded 3%. This situation has had a direct impact on the relationship between sales and mortgages, as not all buyers opt to sign a loan. Approximately half of all sales are made in cash, according to the Council of Notaries. Although the number of mortgages contracted has decreased compared to the previous year, the amount of these loans has remained stable. The average amount fell by only 0.1% year-on-year in September, standing at €143,186, while the capital loaned decreased significantly by 29.7%, reaching €4.4 million. 

Comparing September with August, home mortgages increased by 9.6% (28,344 loans were registered in August), and the capital loaned grew by 13.5%. In the cumulative analysis up to September, mortgage loans have decreased by 17.2%, with a decrease in the capital loaned of 18.6% and a decrease in the average amount of 1.7%. All the autonomous communities have experienced negative annual variation rates in the number of mortgages signed. 

The sharpest falls were in Murcia, with a decrease of 44.8%, followed by Aragón (-39.0%) and Galicia (-38.2%). The regions with the highest number of mortgages taken out were Andalucía (5,900), Comunidad de Madrid (5,854) and Cataluña (5,291).