It was not a good end of the year for the housing market in Spain and the last indicator that corroborates it is mortgages , whose demand suffered between October and December 2019 its biggest fall since 2013. The evolution of prices, the worsening of The perspectives of the real estate sector, the lower consumer confidence and the regulatory or fiscal changes promoted in recent months are behind the slowdown.

That at least reflects one of the conclusions of the Bank Loan Survey published on Tuesday by the Bank of Spain following the questions asked of 10 representative Spanish entities in the sector. In light of its data, the Spanish mortgage market was one of the most affected in the last quarter of the year by the recent legislative changes introduced by the Government in the residential market (with the Mortgage Law as the most significant novelty) and by the conditions of the general economy, whose pace of growth has also slowed down nationally.

This deceleration has affected the confidence of the clients - that before the possibility of worsening they are withdrawn at the time of contracting new debts - and to the one of the entities, that hardened the criteria of approval and the conditions applied in these loans. The Bank of Spain explains that behind this tightening there is " a greater perception of risks and a lower tolerance to them by the entities, although the competitive pressure exerted some influence in the opposite direction".

Thus, the general radiography of the sector in this regard would be marked by three features: there is less demand for mortgages, they are more difficult to obtain and the entities offer worse conditions in their hiring.

Consumer credit

However, the economic deterioration has been felt in a generalized way throughout the Spanish credit market: the demand for loans in all modalities (non-financial corporations, homes for the purchase of housing and homes for consumption) was reduced and the prices tightened. Loan approval criteria, although once granted, the conditions of the new loans remained unchanged for the companies and relaxed for consumption.

Precisely this segment, that of consumer loans , is one of the tricks of banks in recent times to weather the effects of negative interest rates and increase their returns.

The deterioration of the economic perspectives and, above all, the lower solvency perceived by the borrowers led the banks to tighten the criteria for granting this type of loans in the last quarter of the year. The upward trend in the level of delinquency led to a good part of this tightening and, as a consequence, the percentage of consumer loans denied grew again between October and December. The survey does not specify figures in this regard, since it includes qualitative and non-quantitative aspects by the participating entities.

As for the demand, as in the case of mortgages, it also contracted and the reasons must be sought in the lower expenditure on durable consumer goods, the increase in internal financing through savings and the greater use of loans other entities and external financing.

As a positive aspect, the report states that once the bank approved the granting of such a loan, its conditions were softer due to the competition in the banking market.

Non-financial corporations

As for non-financial corporations , their demand for credit decreased in the fourth quarter of 2019 for the sixth consecutive period "due to lower investments and due to the greater use of other sources of financing, internal and external," the survey concludes.

Also, where appropriate, the entities tightened the criteria for granting them a loan, given the higher capital costs and the "greater risk perception". Risks that refer to the situation and the general economic outlook and to the situation and outlook regarding the company itself or the sector to which it belongs.

Looking ahead to the first months of 2020, the entities predict that delinquency will continue to increase and, given this perspective, they expect to continue tightening the criteria for granting loans to all agents, especially in the consumer sector.

According to the criteria of The Trust Project

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