The strong imbalance between rental demand and supply is fueling the mortgage boom in Catalonia. The community is the only one, along with Castilla-La Mancha, where financing for home purchases is increasing, according to data published yesterday by the Notarial College of Catalonia.
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Although home sales have been declining over the past six months, mortgages have resumed their growth path: they increased by 1% that month, 11% in March, and 5% year-on-year in April (latest available data), a month in which sales transactions fell by 10.2%. The vice dean of the college, Raquel Iglesias, confirms that “there is a certain imbalance between sales and loan granting.”
The trend contrasts with the negative evolution of the mortgage market in the vast majority of the country. In fact, the figure recorded in Catalonia for loans to acquire residences is the third highest in the last four years.
Among the most relevant factors behind the mortgage sector boom is the difficulty a significant part of the population has in finding rentals, due to the scarcity of supply and current regulations that limit prices, according to several industry sources. At the moment, “the main buyer is the young person under 40 who was renting and who has a high probability that the landlord will sell the property,” points out economist and University of Barcelona professor Gonzalo Bernardos.
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In this regard, he explains that the buyer with greater purchasing power and, therefore, less dependent on financing is withdrawing from the market, a decision also influenced by high prices. “Demand from the upper-middle class and investment demand generated by these families has collapsed,” which largely contributes to the significant decline in sales. In contrast, households with more modest incomes are driving the sector.
For his part, the general director of Trioteca, Ricard Garriga, points to a second factor driving loan granting: “Many families are changing their mortgages from one bank to another in search of better conditions, especially those who want to switch from a variable to a fixed loan.” This momentum coincides with the rise in official interest rates.
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