If 2023 was the year in which banks focused on the structuring of liability remuneration after years of low rates and even Negatives, 2024 will be the year of the return of the mortgage war. During the last few months, the sudden rise in interest rates and the maintenance of housing prices led to the slowdown in the granting of this type of credit with double-digit falls in the year-on-year comparison. On the other hand, this last month of October the situation changed again when the fall of the mortgage firm came to a screeching halt, according to data from the Bank of Spain. The entities unfrozen the mortgage supply after the summer months and are already instigating what will be the war in the financial world in 2024, that of loans for the acquisition of housing.
The bank is already preparing aggressive offers that allow it to obtain the highest percentage of the pie at the time of the return to mortgage signing and not only during individual negotiation with each client, as is the case now, also in the catalog prices offered on their websites or in the windows of their branches. And the fact is that the entities, which during the last year have seen their accounts spurred by the increase in margins, aspire to recover the business that this double effect took them away from them and which is the basis for maintaining a good profit and loss account, both directly and with cross-products.
Beyond the offers, a possible lowering of interest rates for the second half of the year is also included in the entities’ plans, which It would also adjust the cost of loans for home acquisition, especially for those with a fixed or mixed rate – they combine a first part at a constant price, usually five or ten years, and another at a variable price – which are the most They are signing in recent months.
The price of housing
All this while the price of housing has evolved from more to less in recent months and will continue to do so. Experts confirm that there is a gradual cooling of the market, a slowdown, although – for the moment – purchase and sale prices will not drop abruptly. Why not? The limited and insufficient supply -especially of new construction-, the growing demand and construction costs, among other factors, are more important than the changes in the ECB’s monetary policy and the decline in activity.
From ING they predict that housing will become more expensive by 3% on average in 2023 and 2% in 2024. “Adjusted for inflation, this represents a slight real correction of prices.” The orange bank highlights that the prices of houses in Spain are moving against the trend of other European countries that are already experiencing declines. “Despite the negative impact of rising interest rates, real estate demand continues to resist. Combined with inadequate supply, this is what is driving prices up,” he explains.
Caixabank Research also focuses on insufficient supply. They predict that house prices will rise 1.1% in 2024. “We continue to expect house prices to maintain a slowing path as the impact of the increase in interest rates on the economy is transmitted.” ;. This impact, they explain, is transmitted with a certain delay to the real economy. Now, if the current inflation projections of convergence to the 2% objective in the medium term are confirmed, the ECB could begin to lower rates, and this will be “additional support” for the sector next year.
The most pessimistic forecasts are signed by Bankinter, which predicts a moderate and temporary drop in prices of 2% in 2024. “They should tend to stagnate and even they could fall slightly next year. “Although, if said correction occurs, it will be temporary due to the high rate environment,” points out the entity’s latest report on the real estate sector. House prices will return to the path of growth in 2025, with an increase of 1% due to a more moderate Euribor, affordability ratios at historical averages, balanced supply and demand and more prudent mortgage financing. For the moment, the entity confirms that prices are holding up “surprisingly well” in 2023 despite the economic slowdown, the sharp increase in financing costs and the decline in purchase and sale operations. In fact, Bankinter has revised upwards its estimate for this current year. It now forecasts a 1% increase, compared to the 3% decline previously forecast.
Source: el Economista, December 2023