Banks are accelerating mortgage lending. The economic recovery and the decline in interest rates, which are already approaching their lowest point, are paving the way for residential lending to reach levels not seen since the onset of the financial crisis. In the first quarter, banks approved loans totaling €19,444 million, an increase of 25.4% compared to the same period last year and the highest level in the first three months of a year since 2008.
At that time, according to the Bank of Spain (BdE), the amount was just over €26,000 million, a figure that has not yet been reached despite the revived demand. This double-digit growth confirms the trend that began in 2024 and indicates a recovery after the slowdown in financing caused by the rise in interest rates. Credit activity has increased during these three months. January, for example, recorded the best month in 17 years, with €6,047 million, followed by €6,229 million in February and €7,168 million in March. These figures combined amount to €19,444 million, but are still far from the peak of €43,700 million recorded between January and March 2006.
According to Kelisto.com, the improvement is due to the simultaneous decline in interest rates and the rise in property prices. “Potential buyers are realizing that mortgages are becoming more affordable, which they interpret as an ideal time to buy. This decision is further accelerated by continued price increases,” explains Estefanía González, spokesperson for the price comparison site. The industry itself admitted in a survey of bank loans for the first half of the year that it applied less stringent conditions across all segments. This is reflected in lower interest rates, higher amounts, and a relaxation of the collateral requirements.
In this context, the average cost of approved mortgages hovered around 2.8% in the first three months of 2025, a tenth lower than the average of 2.9% at the end of December last year and the lowest level in more than two and a half years. However, this figure remains above the 2.398% recorded by the Euribor at the end of the quarter, after the European Central Bank (ECB) set the interest rate at 2.5%. Ricard Garriga, CEO and co-founder of Trioteca, points out that the reduction in mortgage costs also means that households have to pay less for repayments, encouraging more families to borrow to buy a home.
The recovery is strengthening the mortgage balance, which, after almost two years at the 2006 low, has once again exceeded the €500,000 million threshold. Specifically, it amounted to €501,119 million in March, driven by the new real estate boom and the decline in early repayments following the end of the free use period. This indicator once again exceeded the half-trillion mark, helping to breathe new life into banks’ net interest income. For the six largest banks (CaixaBank, BBVA, Banco Santander, Banco Sabadell, Bankinter, and Unicaja), this item was reduced by 4.9% due to the end of the loan portfolio revaluation exercise.
Pending the clues that the committee chaired by Christine Lagarde may leave along the way before taking the expected break, optimism is widespread in the sector. Experts believe that the economic uncertainty resulting from the tariff war triggered by the US does not appear to be able to counter this trend in April and May, especially considering that the Euribor is on the verge of falling below 2%. González warns that the risk of a return to protectionism could put downward pressure on interest rates and thus mortgage prices, which could also lead to a recession that would force banks to restrict access to credit. “Given this possibility, those who are able to take the plunge prefer to act now.”
