The average amount of mortgages falls 8.5% from 2022 highs

The 18.3% drop in the mortgage firm in April to the lowest levels since December 2020 has left another key fall in the background to understand the evolution of the mortgage market: the average amount of home loans signed in the fourth month of the year it fell to 136,945 euros.

The figure is the lowest since June 2021, it remains below the threshold of 140,000 euros for the first time since November of that same year and represents a decrease of 8.5% compared to the maximum of 2022.

In October of last year, the average amount of mortgages peaked at 149,700 euros. Six months later, the official figures from the National Statistics Institute (INE) for April reveal that the average value of the loans has fallen by 12,800 euros.

Two major factors explain this fall, of 4.1% compared to the previous March. The most important is the drop in activity in the autonomous communities where housing prices are more demanding.

According to INE data, the number of homes with mortgages in Catalonia fell by 30.8% in April compared to the previous month, and 27% compared to the same month last year. And in the Balearic Islands, the reduction was 14.5% and 28.4% respectively. In the annual comparison, only La Rioja lost more activity.

In the case of Madrid, the monthly decrease was 20.7% and the annual decrease was 21%. Therefore, there is a puncture in three key communities.

In parallel, another basic figure, such as the capital lent by financial institutions, suffered a large decrease of 21.6% in April, up to 3,704 million compared to 12 months earlier.

The other big key to explaining the drop in the average amount lies in the price of mortgages, which has not stopped rising so far this year.

The initial average interest rate jumped in April to 3.09%, the highest level since April 2017. The jump is 75% compared to the same month in 2022. By modality, the average initial interest rate is 2.78% for variable-rate home mortgages and 3.29% for fixed-rate ones.

The result of this price rally is that home buyers are adjusting their mortgage amounts more in order to comfortably pay off their loans. The most solvent families have increased the part of the cost of housing that they pay with their savings, reducing the percentage of financing that corresponds to the mortgage. And, in the case of households with less accumulated liquidity, they are forced to look for more affordable real estate.

A scenario that, according to experts, could be maintained over time with the expectation of new rate hikes in Europe and the Euribor. The index has settled above 4% in the daily rate in this final stretch of the month.