The housing market has entered a new cycle after more than a year of accelerated growth. The first sign was the cooling of sales in practically all of Spain, with 3.4% fewer transactions between January and May. Now, the slowdown in transactions is followed by a slowdown in mortgage signings.
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The number of contracts fell by 0.1% year-on-year in May, down to 42,213 transactions, according to data from the INE published this Monday. This is a stagnation and not a reduction. But, in any case, it breaks a streak of 22 uninterrupted months of growth, during which the total number of mortgages had not stopped increasing despite the drop in transactions. The accumulated total for the year continues on an upward trend, with a 6.2% increase since January.
However, there is another indicator in the real estate market that continues to reach highs: the average amount financed. Loans reached 174,866 euros in May, a year-on-year increase of 9.7% that goes hand in hand with the rising cost of housing. The price per square meter increased by 9.5% last year, up to 2,284 euros, while in the third quarter of 2026 the increase moderated to 3.2% and 2,429 euros per square meter. “Apartment prices keep rising and that is directly reflected in mortgages. Today a family needs to finance about 10% more than a year ago to buy a similar home,” says Ricard Garriga, CEO of Trioteca.
At the same time, loans became more expensive in May for mortgages taken out on homes, with an average interest rate of 2.98%, seven hundredths higher than in the same month of 2025 and the highest since June of that year, with an average repayment term of 25 years. Despite this, the cost of financing remains far from the levels of 2023 and 2024, when the ECB’s monetary policy pushed rates above 3%.
“The market is entering a new phase of the mortgage cycle. Although the volume of transactions remains very high, financing conditions are beginning to reflect the tightening of monetary policy,” says María Matos, head of studies at Fotocasa. This expert highlights that, although credit is still available, banks are increasingly selective about profiles and conditions are somewhat less favorable. “After a long period of intense commercial competition, banks are beginning to prioritize profitability over the growth of new transaction volumes,” she adds.
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For Idealista spokesperson Francisco Iñareta, the slowdown in mortgage contracts will be more visible in the coming months, in line with the decline in home sales. He also warned that interest rates continue to rise and consolidate an upward trend in costs.
This slowdown is not uniform across the country. Navarra (33.5%), the Canary Islands (16.5%), and Catalonia (9.3%) showed increases in mortgage signings, the latter driven by strong demand and a shortage of rental supply. On the other hand, in the Balearic Islands, contract signings fell by 19.6%, followed by Cantabria (-17.9%) and Murcia (13.2%).
However, the sector rules out a downward correction in prices. “What is changing is not so much the interest in buying, but the real ability to find a home that fits price, location, and financing. There is demand, but the market no longer offers the same opportunities as two years ago. This forces buyers to be more selective and to make decisions more prudently,” says Ricardo Gulias, CEO of RN Tu Solución Hipotecaria. Therefore, a moderation of amounts will occur, the consulted experts point out, but the shortage of supply and high demand will keep costs at high levels.
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