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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.

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.

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PROPERTY

Why are Spanish homes so dark?

Despite being known for its year-long sunny weather, Spain is the EU country with the fewest homes with natural light, often intentionally. Why is it that when it comes to spending time at home, Spaniards seem to love being in the dark?

Why are Spanish homes so dark?

Spain – the land of sunshine. The country gets between 2,500 and 3,000 hours of sun per year on average, almost double the 1,600 hours the UK gets, for example.

You’d probably assume that finding a bright apartment in such a sunny country would be a piece of cake, but unless you’re renting or buying a modern home, it might be trickier than you realise.

More than one in ten Spaniards live in dwellings they feel are “too dark” – the highest percentage among all EU countries, according to figures from Eurostat.

As far as dark homes go, Spain is head and shoulders above the EU average of 5.9 percent, and higher than other nations with a high rate of gloomy homes such as France (9.5 percent), Malta (9.4 percent) and Hungary (7.7 percent).

At the other end of the brightly lit spectrum, it’s no surprise to see that countries with cloudier skies and darker winters such as Norway, Slovakia, Estonia, Czechia and the Netherlands have homes that let in plenty of natural light, and yet Spain’s sun-kissed Mediterranean neighbours Italy and Cyprus do make the most of the readily available light.

Dark homes are almost twice as common in Spain as the EU average. Graph: Eurostat.

So why are Spanish homes so dark?

Is it a case of hiding away from the sun, and keeping cool during the summer months? Or is it something else? 

Apartment blocks

The vast majority of Spaniards live in apartments as opposed to houses, often in tightly-packed cities with narrow streets.

In fact, in Spain 64.6 percent of the population lives in flats or apartments, second in the EU after Latvia (65.9 percent.)

By contrast the EU wide average is 46.1 percent.

By nature of apartment living, Spanish homes tend to get less sunlight.

Depending on whether they have an exterior or interior flat, they might not actually have a single window in the flat that faces the street.

If the apartment is on a lower floor, the chances of it receiving natural light are even lower. Internal patios can help to solve this to some extent, but only during the mid day and early afternoon hours. 

why are spanish homes so dark

A dark, narrow street in the centre of Palma de Mallorca. Photo: seth0s/Pixabay

Hot summers

During Spain’s scorching summer months, there’s no greater relief than stepping into a darkened apartment building lobby and feeling the temperature drop. 

In southern Spain, and in coastal regions, Spanish buildings were traditionally built to protect against the heat and hide away from the long sunny hours. White walled exteriors and dark interiors help to keep homes cool.

It’s often the case that bedrooms are put in the darkest, coolest part of the apartment, sometimes with just a box-window to allow for a breeze but no sunlight.

Spaniards’ obsession with blinds and shutters

Spain is pretty much the only country in Europe whose inhabitants still use blinds (persianas), even during the colder winter months.

In this case, rather than it just being down to keeping homes cool during the sweltering summer months, their usage is intrinsic to Spain’s Moorish past and the fact that they provide a degree of privacy from nosy neighbours. By contrast, northern Europeans with Calvinist roots such as the Dutch keep the curtains open to let in natural light and because historically speaking, keeping the inside of homes visible from the street represents not having anything to hide. But in Spain, the intimacy of one’s home is sacrosanct, especially when the neighbour in the apartment building opposite is less then ten metres away.

Keeping the blinds or shutters down also has the advantage of making it easier to have an afternoon nap (the siesta, of course) or to sleep in late after a long night out on the town. 

In any case, it seems hard to believe for some foreigners that many Spaniards are happy to live in the dark whilst spending time at home, regardless of whether they’re sleeping or not. 

A byproduct of this? Dark, gloomy homes.

why are spanish homes so dark

Spaniards aren’t fans of airing their dirty laundry, at least metaphorically speaking. Blinds have historically provided the privacy they’ve wanted from their homes. Photo: Quino Al/Unsplash

The long, dark corridors

Spanish apartments have plenty of quirks that seem odd to outsiders, from the light switches being outside of the room, the aforementioned shutters, the bottles of butane and last but not least, the never-ending corridors. 

Most Spanish homes built in the 19th and 20th century include these long pasillos running from the entrance to the end of the flat. They were meant to provide a separation between the main living spaces and the service rooms (kitchen, bathroom etc), easy access to all and better airing and light capabilities. But when the doors to the rooms are closed as often happens, these corridors become the opposite of what was intended: dark and airless.

Navigating these windowless corridors at night is akin to waking around blindfolded.

dark corridor spain

Light at the end of the tunnel? Dark corridors are a common feature of Spanish homes. (Photo by Josep LAGO / AFP)

Are Spaniards rethinking their dark homes?

Times are changing, and modern designs are experimenting with more spacious, light-filled, open-plan apartments, especially as the Covid-19 lockdown forced many Spaniards to reconsider their abodes. 

It’s also increasingly common to see property ads stressing that the property is diáfano, which means that natural light enters the home from all sides.

However, the vast majority of Spanish homes are still gloomy for the most part, often intentionally.

A combination of traditional building styles, the crowded nature of apartment block living, the use of shutters, the desire to keep homes private, and the long windowless corridors mean Spanish flats can seem dark if you’re new to the country, and with good reason.

Ultimately, it is worth remembering that Spanish society is one that largely lives its life outdoors. Living in smaller apartments, Spaniards generally spend less time at home and more time out and about in the street.

Native to a hot and sunny country as they are, Spaniards’ homes are a place of rest, relaxation and, crucially, sleep.

Spanish people have enough sunlight and heat in their lives; they like to live, therefore, in homes designed to keep cool and dark.

READ ALSO: Why are Spanish homes so cold?

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