Read news from:
Austria
SHARE
COPY LINK
For members

PROPERTY

Property in Spain: Why mortgages are now cheaper than ever

If you’re looking to buy a property in Spain this year, then you’re in luck. Not only have property prices fallen in many regions across the country, but banks are also offering lower interest rates and more favourable mortgages too.

Published: 11 March 2021 14:03 CET
Property in Spain: Why mortgages are now cheaper than ever
Clifftop houses in the majestic city of Ronda in Malaga province, Spain.Photo: Tomáš Malík/Pexels

Mortgages are one of the top buyer concerns in Spain, according to Inspire Property Experts – how to access one and how to make sure you’re getting the best rate. 

The pandemic has caused a lot of financial uncertainty for many, but if you are in the position to be able to buy a property now and want to take advantage of the lower housing prices and cheaper mortgages at the moment, then read on.

Low-interest rates

The pandemic has set a trend for cheaper mortgage loans and an increased commitment to fixed interest rates. 

“It’s a buyer’s market and a good time to buy property right now”, says real estate agent Raf Jacobs from Inspire Property Experts in Barcelona, who also runs a series of property webinars.

Interest rates in Spain are now at their lowest point ever, meaning more favourable mortgages for buyers. 

“Borrowing money has never been cheaper,” says Jacobs, which means that buyers could borrow more to be able to buy better properties. 

In 2019, Spain rolled out new mortgage laws with favourable conditions for both residents and non-residents. These included longer default periods before repossession and the green light for borrowers to convert foreign currency for mortgages into euros.

Combining these conditions with the cheaper mortgages offered today, creates a good opportunity for buyers. 

Why have interest rates fallen so much?

The number of mortgages being taken out in the first few months of lockdown in 2020 almost halved according to Europa Press’ EPData, meaning fewer people borrowing from the banks. 

This caused Euribor, the reference rate for mortgages, to fall to -0.48 at the end of last year, which pushed banks to offer lower rates through their mortgages in 2021.

The average interest rate is published every month by the Bank of Spain and the trend for lower mortgages started last year when the rate fell from 1.81 percent in March 2020, to 1.75 percent towards the end of 2020. 

More fixed rates than variable ones

Last year there had already been a trend towards more fixed mortgage rates, but this year it has been reported that over 70 percent of mortgages granted in Spain are now fixed-rate ones. 

The sharp decline in interest rates generated a drop in variable mortgages. Many banks in Spain decided to promote their fixed mortgages instead to create greater profitability. Some of the banks that have lowered their fixed mortgages are BBVA, Santander and Openbank.

This created a banking war, with banks fighting to provide more attractive mortgage deals to their customers, according to Oi Realtor.

Which banks are offering the cheapest mortgages right now?

According to price comparison website Kelisto.es, the banks that are currently offering the cheapest mortgages rates – both variable and fixed – in March 2021 are MyInvestor, BBVA and Liberbank.

The website says that there has also been an increase in the number of online banks offering competitive mortgages recently, of which MyInvestor is one. The other online banks offering the cheapest mortgages right now are Openbank, the online bank of Santander; EVO Bank and COINC.

Things to be aware of

Mortgage rates may be more favourable right now, but the requirements in order to be granted one are a lot stricter than they have been in the past.

The main requirements are having a stable income, having a job contract and having a certain amount of deposit. Many banks in Spain are currently asking that you have around a 40,000 to 50,000 euro deposit, depending on the price of the property.

This has made it slightly trickier to get a mortgage because of job uncertainty, redundancies and reduction in customers and clients, during the pandemic. 

“Business models for banks in Spain have changed over the past few years”, says Jacobs. “Margins have dropped significantly because of the low-interest rates and banks are looking at new ways of making money”. He predicts that there will be many bank mergers over the next few years, but says this will be less helpful for buyers because there will be “Less service, and less information for clients”.

There is a difference in what type of financing you can access from Spanish banks depending on whether you are a resident or a non-resident. Residents will usually be lent around 70 to 80 percent of the total property amount and get better interest rates, whereas non-residents can only expect a Spanish bank to cover around 60 percent of the cost.

READ MORE:

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.
For members

PROPERTY

BBQs, nudity and plants: What are the balcony rules in Spain?

Though many people hang laundry, plants, and flags from their balcony, in Spain the rules on what you can and can't do on 'el balcón' are not well-known.

Published: 8 May 2024 17:13 CEST
BBQs, nudity and plants: What are the balcony rules in Spain?

Imagine the scene: you’ve just bought or signed the lease on your dream apartment. It’s bright and airy, with plenty of space, and even has a nice-sized balcony to get some fresh air on. You can do whatever you want there, right? 

Not exactly. In Spain the rules on what you can and can’t do on a balcony (even if it’s private) depend on a few factors, namely the regional and local rules, as well as getting the approval of the building’s homeowner’s association – known in Spain as la comunidad.

Some of them might just surprise you.

READ ALSO: ‘La comunidad’: What property owners in Spain need to know about homeowners’ associations

There are four main things or activities on balconies that could potentially put you on the wrong side of the local rules and even get you fined: barbecues, plants, laundry, and flags.

In all cases (even if you don’t think you’re breaking any rules) you’ll generally need to consider two things: firstly, does this affect or change the building’s façade? And secondly: will la comunidad allow it?

Barbecues

In Spain there is no national law prohibiting barbecues on private property, so in principle it is legal as long as the barbecue is lit in a private space such as your own balcony, garden or terrace, and not a shared space.

Often in Spain, the roof (usually referred to as la terrazza) is a shared space people use for storage and hanging their laundry, so be sure to check with the comunidad.

In terms of your own balcony, however, although there’s no law saying outright you can’t have a barbecue, you’ll need to take into account the rules and regulations in force in each locality or region. There may also be specific rules within the building that long-term homeowners have developed over the years.

As we will see, many of these low-level regulations are delegated to local governments and town halls in Spain, so the answer to these sorts of questions is usually: it depends where you are.

However, according to Article 7 of Spain’s Horizontal Property Law, “the owner and the occupant of the flat or premises are not allowed to carry out in it or in the rest of the property activities prohibited in bylaws, which are harmful to the property or which contravene the general provisions on annoying, unhealthy, harmful, dangerous or illegal activities.”

This basically gives your neighbours the right to complain about noise, smells, smoke and any possible fire risk in or around their building, which barbecues could plausibly fall under.

As with co-living anywhere in the world, regardless of the regional or local rules, employ some common sense: be reasonable, listen to neighbour’s concerns and take up any disputes with the President of la comunidad.

READ ALSO: What you need to know before having a barbecue in Spain

Plants

Again, with plants the responsibility falls on each local authority to set the rules. In Spain, most regions and town halls state that, as long as the architectural or structural elements of the building are not changed or weakened in any way, putting plants on your balcony is permitted.

However, note that many terraces and balconies do have maximum weight regulations that must be respected in order to guarantee their safety, which is 200kg per square metre. If this figure is exceeded (and it can be proved) you could theoretically be fined.

Laundry

Laundry lines criss-crossing the streets might be one of the more picturesque images of Spanish life, but the people doing it might actually be breaking the rules.

How do you know? You guessed it, it depends where you. You’ll need to check with your local authority on this one, though municipal regulations in Barcelona, Madrid and Valencia all regulate hanging laundry from your balcony, which is again outlined in the Horizontal Property Law.

This principally seems to be because it affects the façade of the building (a common theme when it comes to balcony rules in Spain).

In places with rules about hanging laundry from balconies, you could be fined up to 750 euros if you don’t comply with the rules.

However, according to Foto Casa, even if you live in an area where there are no bans or penalties against hanging laundry on the balcony, you’ll still likely need the permission of la comunidad.

READ MORE: Spain’s weirdest laws that foreigners should know about

What about flags?

Whether it be the Spanish flag, the Catalan, Valencian or Andalusian flags, or LGBT, trade union or football team flags, flags proudly hanging from balconies is another mainstay of Spanish life.

It’s also one of the more controversial ones too, especially within comunidad meetings. Hanging flags on the balcony, as well as allegedly altering the aesthetics and security of the building (the same concern as with laundry) often has ideological connotations that can cause conflict.

Again, as with laundry, hanging flags on the balcony will require the approval of all the owners within the community, something that must be agreed at a meeting, as per the Horizontal Property Law.

However, if the flag is placed inside the property, as it is a private property, fellow homeowners cannot oppose it, even if it is visible from the street, according to Foto Casa.

Nudity 

Article of 185 of Spain’s Penal Code only considers being naked at home to be obscene exhibitionism and sexual provocation if it affects minors, in which case it is punishable with a fine or up to a year in prison.

Therefore, you could technically sunbathe shirtless or naked on your balcony in most cases without getting into trouble, although it won’t necessarily go down well with your neighbours and/or flatmates and you be reprimanded for it.

READ ALSO: Can you go shirtless or wear a bikini in the street in Spain?

SHOW COMMENTS