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Spanish banks on track for best mortgage year since 2008 as borrowing hits €74 billion
Housing prices across Spain have soared to record highs but demand still shows no sign of slowing down
Spanish banks are gearing up for their strongest year of mortgage lending since 2008, back when the country's housing bubble was still inflating. Despite property prices climbing to eye-watering levels in many areas, people are still queuing up to borrow.
Last year, the country’s financial institutions approved €74.26 billion worth of mortgages between January and the end of November, a whopping 22% jump compared to the same period in 2024 when the figure stood at €61.076 billion, according to Bank of Spain figures. That's quite the comeback considering how many people were predicting a complete property market collapse just a couple of years ago.
Ferrán Font, director of studies at pisos.com, believes this surge is partly down to record-breaking sales numbers and banks falling over themselves to offer competitive deals. November 2025 alone saw the highest number of mortgage signings since 2010 and while the December figures are still pending, the industry looks set to hit 500,000 mortgages for the whole of 2025.
The total amount owed on active home loans has now topped €517 billion as of December's end, up 3% (or nearly €19 billion) from December 2024. Lower financing costs have helped banks make up for slimmer interest rates by simply lending more money to more people.
It's a stark turnaround from recent years when rising interest rates and the scrapping of early repayment penalties saw families using their pandemic savings to pay down their mortgages. The outstanding balance even dipped below €500 billion before recovering last March.
The so-called mortgage war between banks has turbocharged lending even as housing prices have gone through the roof. The average mortgage now stands at €170,771, up 11.7% on last year. Meanwhile, housing prices themselves jumped nearly 13% in the third quarter of 2025, the biggest increase since the bubble burst all those years ago.
Overall household credit has climbed to €715.884 billion, a 4.4% rise that marks the largest year-on-year growth since 2008. Much of this is being driven by consumer credit, which has rocketed up more than 12% to over €116.067 billion, an all-time high. Loans for other purposes have actually dropped from €81.105 billion in December 2024 to €78.580 billion last year.
The good news is that default rates continue to hover near the historic lows first seen in September 2008, propped up by economic growth and a resilient job market that's been bolstered by immigration.
But industry forecasts for 2026 suggest mortgages are going to get pricier, even if demand remains strong.
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