Property financing: what mortgage interest rate in Catalonia?

Spanish banks offer attractive deals that are highly sought after not only by residents, but also by non-residents. Mortgage rates have remained stable and at historically low levels for some time and banks have further reduced interest rates on fixed-rate mortgages. This indicates that the current moment presents an excellent opportunity to make a property purchase.

What is the evolution of mortgage interest rates in Spain?

After going through another year of major upheaval caused by the health crisis, one might have expected the Spanish property market to be on the verge of collapse. Yet after a closer look at the most recent data, a much more encouraging outlook is beginning to emerge.

At present, sales by domestic and international buyers remain stable, with some regions even seeing price rises at the upper end of the market. It is widely acknowledged that by 2024 property values will rise in line with economic expansion and sales will see a corresponding recovery.

According to the most recent data provided by the Spanish National Institute of Statistics, the average interest rate on mortgages in Spain stands at 2.11% for variable rate loans and 2.7% for fixed rate loans. Approximately one third of Spanish mortgages fall into the variable rate category, while the remaining two thirds are classified as fixed rate. It has been observed that the average term of these mortgages extends over a period of 24 years.

Spanish banks offer very attractive deals for both residents and non-residents, which sets them apart from their European counterparts. Mortgage rates in Spain have remained stable and historically low for some time now, with Euribor plunging steadily into negative territory since 2015. In order to attract more funds away from variable-rate loans that are dependent on Euribor, banks have reduced interest rates on fixed-rate mortgages. As a result, they are currently at their lowest level since 2006.

It is not uncommon to findstable rates, hovering around 1 to 1.5%. On the other hand, there are also fluctuating rates linked to Euribor, between +1 and +1.5%, which are fairly common. In December 2021, Euribor fell to its lowest ever recorded at -0.648%, only to rebound shortly afterwards and stabilise at around -0.55%.

Mortgages to buy property in Spain made easier for foreigners

In Spain, where international cities such as Barcelona attract a significant proportion of homeowners, banks are also beginning to recognise the importance of foreign buyers and their value. According to Kevin Monger, founding partner of Mortgage Direct, Spanish banks used to fear that a non-resident would not be able to pay their mortgage. However, this has now changed and there is virtually no disparity in the rates offered to non-residents compared to Spanish nationals and tax residents.

Monger further explains that themortgage market was regulated in 2019, which has prevented banks from imposing additional products on borrowers. As a result, many mortgage packages now only include home insurance, which is in line with buyers' preferences. If you're wondering where to live in Spain for your retirement, you can set your sights on the Costa Brava and take advantage of a mortgage for your property deal.

What are the mortgage requirements for buying a property on the Costa Brava?

Obtaining a mortgage loan in Spain depends on the financial institution, the personal situation of each applicant and certain common requirements.

Lenders generally ask people who want to take out a mortgage to have a stable income that is sufficient to guarantee the monthly repayments. This may involve income from self-employment or any other reliable and provable source of income such as pensions or rent.
Lenders will look carefully at the applicant's credit history to assesstheir ability to repay and overall creditworthiness. If the credit history is favourable, i.e. there have been no instances of late payment, this will greatly increase the chances of obtaining a loan with a favourable rate.

As a applicant for a home loan to buy a business in Spain for example, you traditionally need to have savings for your initial payment. This corresponds to a certain percentage of the value of the property. In a country like Spain, this is usually 20% of the purchase price of the house or flat.

How to find the best interest rate for buying property in Spain?

To find the best interest rate for buying a house or business in Spain, you need to compare the loan offers available from different banks. You can use online comparators, or use our services to find the offer best suited to your profile.

Also think about negotiating the terms of the loan to buy property with your chosen bank by trying to obtain lower rates, reduced fees or additional benefits. You can use your personal contribution, your debt ratio, your professional situation or your banking history to make your case.

A trick that has already proved its worth in France is to play up the competition between banks by showing them that you have received more attractive offers from other establishments. In this way, you can obtain a counter-offer, or a transfer offer, which will allow you to benefit from the best interest rate to buy property in Catalonia.

Immo 365, at your service for your property project in Catalonia

As you have understood, finding the best interest rate to buy property in Catalonia is not an easy task, but it is possible if you find out, compare and negotiate. You also need to take into account the specific features of the Catalan property market, which can present opportunities, but also risks.

At Immo365, we are entirely at your disposal to provide you with the best possible support for your project. You can consult our real estate capital gains simulator for non-residents in Spain to estimate your income at the end of your real estate transaction.

We are one of the leaders on the Costa Brava given our rich and diverse portfolio of properties. Whether you are looking to buy, sell or let a property, our multicultural and multilingual team (7 languages spoken: Spanish, French, Catalan, English, German, Dutch and Russian) offers you its professional expertise upstream, during and downstream of your project. The lawyers with whom we work will provide you with invaluablelegal advice to perfect your various operations (buying, renting, selling, inheritance, taxation in Spain…).

Do not hesitate to contact us to make your property acquisition project on the Costa Brava, a reality!