A man observes posters of houses for sale Menorca.


In the agencies they notice a break in activity. The sector warns that the average time of sale of a property will be lengthened and that they will be revalued less than in the last two years

A man observes posters of houses for sale Menorca.EFE
  • Eurbor This will make your mortgage payment more expensive depending on the year you signed it

The rate hike is turning out to be a pitcher of cold water on the overheated market of the house. The increase in the price of money has been affecting the price of mortgages for months, but its impact also extends to the rest of the sector and is already noticeable in the demand for housing, sales, prices and, by extension, the real estate value.

After years at historical lows, in the first quarter of 2022 there was an increase in mortgage rates of 63 basis points, the largest semi-annual rise of all time, as published yesterday by the European Central Bank (ECB). In an article included in its Economic Bulletinthe Eurobank estimates that an increase of one percentage point in mortgage rates causes a 5% drop in housing prices after two years, as well as an 8% drop in real estate investment.

However, if a non-linear projection is taken into account, the impact of that one percentage point increase is doubled. So house prices could fall by 9% and investment would fall by 15% in two years.

The conclusions draw attention after the escalation by the brick boom of the pandemic and on the verge of a new rate hike by the ECB at its next meeting in October. “In real estate, this means more expensive mortgages and more restrictive access to financing by both households and builders,” says Christina AriasDirector of the Appraiser Studies Service Tinsa.

Double mortgage claims

Mortgages have become the main focus of user claims to Spanish financial institutions in 2021. Last year, the Bank of Spain received a total of 11,481 claims related to housing loans, 94.1% more than in the previous year (almost double), and now account for a third of the balance sheet total after increasing the proportion to 33.4%.

It is one of the conclusions that the Claims Memory presented yesterday by the banking supervisor, in which it also notes an increase in financial claims in general of 61% compared to 2020. In total, it received 34,330 requests from users, which is one of the highest figures in the last decade In the regulator’s opinion, 2022 could close “very close” to the historical maximum of 2017.

In the Report, the Bank of Spain explains that in 2021 “it is not possible to identify a single cause that could explain the high volume of claims received” and these are distributed in a fairly homogeneous way and following the pattern of the immediately previous years.

After the mortgages are the cards -credit, debit, ‘revolving’ and prepaid-, with 10,132 claims (80.2% more) and a share of 29.5%, and then current accounts and deposits, with 5,899 complaints (40.7% more and a weight of 17.2%).

“In this way, in the coming months we could expect a moderation in demand and supply of housing, with opposing effects on prices, and that together we estimate that they would lead to a slowdown in the growth rates of prices observed in the residential segment last year,” adds Arias.

In Spain, current price increases are between 5% and 7% and, although it is difficult to make a general forecast due to the heterogeneity of the market, Ferran FontDirector of Studies and spokesperson for the real estate portal Pisos.com, concedes that the year could end with less than 5% growth.

“The forecasts of the value of real estate change. Until now they grew at a high rate, especially in the big capitals, but it is foreseeable that the reduction in the purchasing power of buyers and the slowdown in sales will slow it down in the second half. of the year. It is not so much that the houses are going to be devalued, but that they will be revalued less”, he adds.

This affects the profitability of those who want to sell their property in the coming months. “The forecasts indicate that the price of brick continue decelerating towards the end of the year, therefore, it is advisable that those who are thinking of selling their flat do not take too long to make the decision“, they warn from the HelpMyCash comparator.

At the foot of the market, the changes are already beginning to be noticed. Sources from the sector assure that real estate offices and agencies have experienced a break in the generation of new sales and business opportunities since July. “There is a clear slowdown in the volume of operations that has been registered until now”, taking into account the acceleration of the first semester to anticipate, precisely, the rate hike.

In the coming months it is estimated that lengthen the average time of sale of a property and the gap that currently exists between the price at which homes are published on real estate portals and their final sale price will be shortened. “The usual thing is to publish the house at a price that is later lowered between 5% and 10% before closing the sale. Faced with the rise in mortgages, buyers will be less willing to pay premiums. Therefore, the sellers will be forced to adjust the values ​​from the beginning to avoid delaying the sale time even more”, they explain in HelpMyCash.

Source: www.elmundo.es

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J. A. Allen

Author, blogger, freelance writer. Hater of spiders. Drinker of wine. Mother of hellions.

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