Consumer Lending in Spain

Consumer gross lending records lower growth as the Spanish economy weakens

The Spanish economy demonstrated the initial signs of a slowdown in 2019. According to the Bank of Spain’s latest forecast, Spanish GDP will grow by 2.

Mortgages/housing growth slows after a strong review period

The low interest rate for mortgage credits and the recent recovery of the economy were among the factors for the strong growth of new mortgage contracts over the review period, which will lead to a strong increase in the outstanding balance over the forecast period. The outstanding balance had declined over the review period as a result of the lower rate of new mortgages being taken out during the economic crisis.

New Law on mortgages to increase transparency

A new Law on Mortgages was approved by the Spanish Congress in February 2019. The law will increase transparency around the conditions concerning mortgage loans, regulate the legal status of real estate credit intermediaries and real estate lenders, strengthen the guarantees for real estate credit recipients in the contracting process, lower costs associated with changes in mortgage contracts and establish penalties for breaches of the provisions of the contract.

The Bank of Spain remains vigilant about the growth in consumer credit

The Bank of Spain continued its close vigilance around the rapid increase in the volume of new consumer credit in 2019, especially for durables and auto lending, both of which recorded double-digit average growth over the forecast period. According to The Spanish Banking Association, consumer credit in Spain represents around 5% of banks’ portfolio in the country.

Gross consumer lending to continue to grow, albeit at more moderate rates

After strong growth in gross consumer lending over the majority of the review period, lower rates were recorded in 2019 across all categories as the recent strong economic growth began to slow and consumers became more cautious. This attitude is set to continue over the forecast period, with lower current value growth expected than that witnessed over the review period.

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