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An increase in mortgage approvals

The sound of the 2008 financial market crash will continue echoing in our ears for a long time to come, but there is no doubt that the economic recovery has finally settled in our country. One of the best sources to verify this change of trend is the real estate market, one of the most punished during the last major crisis. Precisely for this reason, the improvement of different indicators related to this sector is good news for the whole national economy. The mortgage approvals for buying a house is one of the parameters that has been performing better in recent months.

According to data from last July, the approved loans for purchasing homes soared by 32.9% compared to the same month in 2016. It did so in very advantageous conditions for borrowers since the average interest rate was only at 2%. The reason is none other than the monetary unit affected by low interest rates, with those of the euro, dollar and the pound sterling remaining at historically low levels. One of the consequences of this situation is that the Euribor, a benchmark for fixing the interest on mortgages, continues in negative territory.

The loan conditions to buy a house are, therefore, better than a year ago despite the fact that the prices of the real estate market continue increasing. In the second quarter of 2017, the price per square metre in the large Spanish cities increased by 11.8% compared to the same period in the previous year. In fact, the 326.3 euros per square metre that were recorded in July are the best data since the end of 2012. This recovery is more visible in cities such as Madrid, which has already become a preferred destination for foreign investments.

Madrid - credito vivienda.jpg

In any case, prices remain comparatively low, especially if we take into account the levels registered before the outbreak of the crisis. In the first half of the year, the resale property prices rose by an average of 8.24% throughout Spain, with great prominence in the coastal regions. However, Madrid was quite close to this figure as it recorded a considerable rise of 7.36%. One of the explanations for this trend is that the stock of new-build properties is practically exhausted, given that it has been reduced by more than 90% since 2007 due to the absence of new properties for sale.

All this avalanche in figures could lead us to assume that Spain is experiencing a new bubble just a decade after the last one burst. Yes, absolutely. As we have already pointed out, the potential for growth is still considerable due to the sharp fall experienced by the real estate industry between 2008 and 2014. On the other hand, the dynamics of the housing market are accompanied by other macroeconomic data. In the second quarter of the year, 375,000 new jobs were created, while the growth of the Spanish economy can potentially return to stand at 3% for the third consecutive year.

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