The Decline of Euribor Boosts Alicante Province to Its Second Highest Year of Mortgage Approvals Since 2010

In mid-2024, the decline of the Euribor led to a shift in the mortgage cycle, revitalising the granting of mortgages after a period of severe downturns. High property prices, lack of supply, and elevated interest rates had made financial loans prohibitive for many.

However, the European Central Bank's monetary policy shift has revitalised home purchases, with mortgages in Alicante province rebounding from July onwards. Indeed, Alicante recorded its second-best mortgage year since 2010, only surpassed by 2022, according to data from the National Statistics Institute (INE) published this Wednesday.

The strong year-end performance resulted in the province closing 2024 with 19,250 mortgages granted for home purchases, 332 fewer than in 2022, the best year in the last 14. The dynamism of the autumn months, which saw the highest figures since 2010, allowed the province to end 2024 with over 2.193 billion euros in home purchase loans.

In fact, when considering mortgages for acquiring plots or urban and rural estates, the number rises to 25,184, slightly below 2022 but indicative of the cycle change and the mortgage boom in the second half of 2024.

In October, mortgages peaked at 2,335 granted for home purchases, totalling over 263 billion euros in credit. To see similar figures, one must go back to September 2010, when over 2,400 approvals were recorded. Despite the positive data, 2024 is far below the real estate bubble, when in some months, over 8,000 mortgages were granted.

Specialised real estate portals like Fotocasa indicate that these figures are "a great success" considering the interest rate hikes implemented by the European Central Bank during the first half of the year. For the head of studies, María Matos, 2024 is "a reflection of the great dynamism in home acquisition, driven by factors such as optimism and buyer confidence in the market."

Matos highlights that while "fixed-rate mortgages will remain the most popular, variable-rate mortgages, discouraged by the Euribor declines, are already showing greater competitiveness, especially if market conditions continue to improve." The spokesperson insists on the trend change and predicts a "possible uptick in demand in the short term, driven by better prospects in the mortgage market."

Regarding the 2025 outlook, the credit cycle change, influenced by the Euribor decline, has resulted in more affordable mortgages. Fotocasa emphasises a new scenario where "fixed-rate mortgages are being reintroduced with force."

Matos explains that "the European Central Bank is expected to continue rate cuts until they are close to 2%, likely occurring during the first half of the year, aiming for market stabilisation and accommodation in the second half." The expert believes the rate reduction "will continue to indirectly cause an increase in housing prices by attracting more purchase demand to the market."