The worrying and serious message from the Bank of Spain on housing in 2023
The housing market will suffer another shutdown in the coming months. This is what the 'Quarterly report on the Spanish economy' that the Bank of Spain has just issued.
The analysis carried out by this body shows a certain slowdown in real estate investment, a trend that has been detected since the second quarter of this year. And everything indicates that it will remain until the end of 2022 and in the first two quarters of 2023.
This would be motivated by the current macroeconomic context, where there is high inflation and an increase in interest rates. The situation of uncertainty also does not invite citizens to take risks in the acquisition of a home.
The Bank of Spain points out what will happen to housing in 2023
From the Bank of Spain they try to give the reasons why they project this situation of deceleration. They mainly refer to the increase in the price of bank credit and the loss of dynamism in visas for new constructions. Likewise, there is an increase in the costs of construction materials.
However, changes are also predicted in terms of housing prices. Yes, because, it seems, there is a scarce supply that is unable to meet the high demand of buyers.
Throughout the second quarter of 2022, they explain that growth has moderated slightly. However, it maintains a remarkable year-on-year progress of 8%, according to INE data.
There is also some stagnation regarding new work visas. And it is that, in the first six months of the year, they reached 61,245 units, which represent only 3% more than in the same period of 2021. This is indicated by the latest information released by the Ministry of Transport, Mobility and Urban Agenda .
So the statistics are not as positive as they expected. Last July, 8,869 new construction visas were granted, which is the lowest number since 2017. Of course, without taking into account the pandemic data.
▶️ Video of the day
The notice of the Bank of Spain
The Bank of Spain alerted families with mortgages a few days ago, as it predicted a complicated few months due to the rise in interest rates. Added to this was rising prices and high inflation.
For this reason, many will see their monthly fee increased, with serious problems to make it to the end of the month with such considerable increases that await them. It is estimated that there is a significant number of "highly indebted" Spaniards. In other words, they contribute 40% of the monthly salary to the payment of the mortgage debt.
In total, a little more than one and a half million people would find themselves in this situation. And in view of everything that needs to be achieved, there are people who have already begun to mobilize. Thus, so that the quotas do not skyrocket, they will try to replace variable rate loans with fixed rate ones.
The Bank of Spain recommends switching to the latter option. The year had started with the Euribor in the negative, but it is already at 2.5% and with the possibility that it will continue to rise.
How to access a fixed rate mortgage
There are several ways to change a variable rate mortgage to a fixed rate mortgage. The first option would involve opting for a modification of the loan conditions, which should be discussed with the bank in question.
And the second possibility would consist of a subrogation, which involves the transfer of the mortgage to another entity. For his part, the last alternative would be to ask the bank to increase the repayment term.