Spanish mortgage signings dip 0.1% in May, snapping 22-month growth streak

The Spanish mortgage market recorded its first annual decline in almost two years during May, according to data published on Monday by the National Statistics Institute. The slight contraction accompanies a modest uptick in borrowing costs and sharp regional disparities, with some autonomous communities still posting double-digit growth.

National figures and rate rise

A total of 42,213 mortgages were constituted on dwellings in May, a drop of just 0.1% compared with the same month in 2025. The result breaks a run of 22 consecutive months of year-on-year increases. Despite the monthly dip, the year-to-date total from January remained 6.2% higher than the same period last year. The average loan amount reached 174,866 euros, up 9.7% from May 2025, while the average term was 25 years.

The average interest rate on new home loans rose to 2.98%, seven hundredths of a percentage point above the level recorded in May 2025 and the highest since November. It was the sixteenth consecutive month with a rate below 3%, a threshold first crossed in February 2025 after nearly two years above it.

The increase in rates is largely linked to geopolitical tensions in the Middle East. Attacks by the United States and Israel drove up oil prices months ago and, with it, inflation, which has made financing costs more expensive.

Fixed-rate dominance

Borrowers continued to favour fixed-rate products. Six out of every ten new home loans, 60.9%, were signed at a fixed rate in May, marking the ninth straight month above the 60% mark. Variable-rate mortgages accounted for the remaining 39.1%. The average initial rate was 3.00% for variable loans and 2.96% for fixed ones.

Modifications to existing mortgage conditions fell 17.1% year-on-year. Of the 9,342 loans that underwent changes, 82.9% involved interest-rate adjustments. Novations, or renegotiations with the same lender, dropped 23.4%, while borrower substitutions rose 4.0% and lender substitutions climbed 14.5%.

Regional winners and losers

The national slowdown masked wide regional gaps. Navarra led with a 33.52% jump in mortgage signings compared to May 2025, followed by the Canary Islands (16.52%) and Catalonia (9.30%). At the other end, the Balearic Islands suffered a 19.55% decline, Cantabria fell 17.91% and Murcia dropped 13.25%.

In terms of capital lent, the Canary Islands saw a 46.26% surge, Navarra rose 31.31% and Catalonia gained 21.94%, while Cantabria registered a 17.21% decrease.

Selected provincial snapshots

Andalusia bucked the national trend, recording a 6.7% increase to 8,367 home mortgages, with capital lent up 14.04% to 1,276 million euros. Córdoba province specifically signed 630 mortgages, 27 more than in May 2025, a 4.5% rise, though total capital across all property types dipped from 99.4 million to 89.7 million euros.

In Galicia, home mortgage signings fell 10.2% to 1,548, while La Rioja registered a 2.3% decline to 303 operations. Galicia saw 2,316 mortgage cancellations in total, including 1,635 on dwellings. La Rioja recorded 707 cancellations, 490 of them on homes.

The market is entering a new phase of the mortgage cycle. Although the volume of operations remains very high, financing conditions are already beginning to reflect the tightening of monetary policy. Credit is still available, but conditions are changing.

What lies ahead

With purchase transactions cooling and investor activity retreating, the gradual softening of mortgage volumes appears to be feeding through from the broader housing market. Rising property prices, driven by constrained supply, continue to push up average loan sizes even as the number of new loans edges lower.