According to the statement of the Bank of Spain, the residential real estate market in Spain shows no signs of decline, so there is no need to apply macroprudential measures (approx. sector support to protect against systemic risks).
There has been a «slight» increase in real estate prices, but it should not be a cause for concern.
According to available data on the Spanish real estate market, it is known that there are some indicators of imbalance: since the beginning of 2020, the supply has shown slight signs of overvaluation, and in 2021, the revaluation even increased slightly. But the real consequences of such an imbalance will need to be measured by the further behavior of the market.
Angel Estrada, Director General of the Financial Security, Regulation and Solutions Department at the Central Bank of Spain, pointed out that part of the increase in the cost of residential real estate is due to the increase in the cost of building materials on the global market. However, the Bank once again indicates that there is still no systemic risk. But careful market monitoring is recommended.
In addition, the report notes that in 2021, the increase in interest rates on mortgage lending in Spain was particularly pronounced. In annual terms, the growth was more than 40% by the end of the year. At the same time, due to the fact that the growth of rates started from a low level, the ratio of the annual inflow of new loans to the country's GDP remains at the level of the rest of the Eurozone countries. The European Council for Systemic Risks (ESRB) has not found systemic imbalances in the real estate sector of European countries.
Indicators of the volume of issuance of new mortgage loans for housing remained stable both in the first and in the second half of 2021 and, at the same time, were record since 2010. In view of this, the balance of such lending continued to grow, reaching 1.2% in the fourth quarter of 2021, which, in turn, is a record figure in 2011. The total cost of new mortgage loans in the past year amounted to about 14 billion. euro.
Angel Estrada also emphasizes that despite the growth of mortgage lending, even against the background of rising interest rates, loans are issued under strict control, approved carefully and on «comfortable» terms.
The report of the Bank of Spain indicates that the observations do not show that there is a softening of the criteria for issuing loans. Nevertheless, there are grounds to consider imbalances within the Eurozone real estate markets as a «significant source of risks» for the Spanish banking sector. The Central Bank emphasizes the need to carefully assess the availability of sufficient resources to cover possible losses.