The cost of taking out a mortgage to buy a home has risen sharply over the past decade. Between August 2015 and August of this year, the average mortgage in Spain increased from just over €100,000 to nearly €170,000, representing a rise of almost 63%. In some regions, the increase has been even more dramatic. In the Canary Islands, for example, mortgage amounts are now 68% higher than a decade ago.
Figures published by the National Statistics Institute (INE) show that in August 2015, the average mortgage for purchasing a home stood at €104,318. By August this year (the most recent data available), that average had risen to €169,650.
This increase, although significant, is still slightly below the rise in property prices during the same period. Over the past ten years, the price per square metre in Spain has risen from €1,524 to €2,679, an increase of around 76%.
Regional differences: Madrid and Andalusia lead the surge
Some autonomous communities show increases well above the national average:
- Madrid: mortgages have almost doubled, rising from €141,847 to €276,158 — a 95% increase. Even so, this growth is only half the increase in price per square metre in the region, which jumped from €1,557 to €4,384.
- Andalusia: average loan amounts have risen by 77%, from €89,042 to €157,647, while the price per square metre has increased by 59%.
Experts point to foreign demand as a driving force behind rising house prices in these two regions. In the first half of this year alone, home purchases by foreigners increased by 2% year-on-year, totalling 71,155 transactions. According to data from the General Council of Notaries, buyers from the United Kingdom, Morocco and Germany accounted for 19.3% of all foreign purchases.
Madrid and the Costa del Sol in Andalusia have become particularly attractive to large investors and high-net-worth individuals.
Other regions with major mortgage increases
The regions with the largest increases in mortgage amounts over the decade include:
- Valencia: +74%
- Balearic Islands: +70%
- Canary Islands: +68%
- La Rioja: +63%
- Murcia: +56%
- Catalonia: +53%
Smaller increases were seen in:
- Navarre: +50%
- Basque Country: +45%
- Cantabria / Castile-La Mancha: +43%
- Castile and León: +37%
- Galicia: +35%
- Asturias: +33%
- Aragon: +31%
- Extremadura: +28%
Measures to support homebuyers
In parallel, governments are introducing incentives to alleviate the financial burden:
- Spain’s Treasury has confirmed that buyers who purchased a home before a certain date will retain their right to deduct up to €9,040 from taxable income.
- The Canary Islands Government has announced that it will guarantee 15% of mortgages requested by buyers under the age of 40, to facilitate access to first-home financing.
