Spain stands out as one of the world’s most attractive destinations for non-resident foreigners, thanks to its favourable climate, delicious cuisine, high-quality public services, and relatively affordable property prices.
In the past two years, over 250,000 homes have been purchased by foreign nationals, and forecasts suggest that thousands more transactions, many involving mortgage financing, will be completed by 2024.
In-house data from Unión de Créditos Inmobiliarios (UCI) show that this year, foreigners are signing loans of an average amount of around €190,000, which in most cases are to buy a second home on the Mediterranean coast and are at a mixed interest rate. The average age when signing their mortgage is 45 years old, while the most common profile is executive or businessman. In terms of nationality, British and Dutch are the most common, along with Spanish expatriates.
This article reviews the current profile of foreign mortgages and what changes there have been in the last five years:
Second homes on the coast and mixed rates
According to UCI, nearly 23% of mortgage financing this year has been allocated to foreigners. On average, these mortgages amount to approximately €189,400, while the properties they purchase cost around €297,000.
The Loan-to-Value (LTV) ratio for this group, which reflects the mortgage amount relative to the property’s purchase price or appraised value, stands at 57.2%. This is below the typical maximum that banks offer, which is generally 80% for primary residences and 70% for second homes.
Second homes dominate the market, with the majority of financing transactions directed towards them. So far this year, 91.3% of the mortgages granted by UCI to foreigners have been for purchasing holiday homes.
This trend is reflected in the distribution of properties, with most located along the Mediterranean coast. Andalusia leads with 30.6% of the total, followed closely by the Valencian Community at 29%. Catalonia accounts for 11.5%, the Canary Islands for 10.9%, and Madrid for 7.7%. The Balearic Islands (5.5%) and Murcia (4.4%) complete the list of top destinations.
Regarding interest rates, a significant majority of foreigners opt for mixed-rate mortgages, which have gained popularity due to recent bank offers. At UCI, 96.7% of foreign borrowers choose this option, while the remainder is split equally between fixed and variable-rate mortgages.
Professional profile and nationality
The company's study reveals that the average age of foreign mortgage borrowers is 45, with executives and entrepreneurs being the most common profiles. Specifically, mid-level executives make up over a third of the total (34.4%), followed by entrepreneurs at 19.7%. Business specialists represent 15.8%, self-employed individuals 8.7%, and senior executives 7.7%.
These findings align with data from idealista/hipotecas, idealista's mortgage broker. According to the Q2 report, the average monthly income for foreign households applying for a mortgage in Spain is €9,420.
By nationality, British nationals lead the ranking, accounting for 23.5% of the total. They are followed by foreigners already residing in Spain (15.8%) and the Dutch (12%), with the Netherlands recently gaining significant traction in the market.
Americans make up 9.3% of the total, benefiting from the strong dollar to invest in Spanish property, while the French represent 7.6% and the Irish 2.2%.
Changes and coincidences compared to 2019
UCI's study also examines how the market has been changing in the last five years and what characteristics of foreigners taking out mortgages in Spain to buy a home have remained the same.
For example, since 2019, the average price of the properties they buy has fallen, as has the mortgage amount. At that time, the prototype mortgage for foreigners exceeded €211,000, compared to the current €189,382. In the case of house prices, the average has gone from €330,000 to €296,700. As a result, the LTV has fallen by five percentage points to 57.2% today.
The popularity of variable and fixed-rate mortgages has plummeted from 63% to just 3.2%. Similarly, the proportion of British customers has decreased from nearly 38% five years ago to 23.5% in 2024. In contrast, the share of Dutch borrowers has nearly tripled over the same period, while US borrowers have seen a dramatic increase from 2.9% in 2023 to 9.3% this year, having had no representation five years ago.
The share of financing operations by foreigners has increased significantly, rising from 8.7% to 22.7% of the total amount formalised by UCI. Middle managers and entrepreneurs have become the most prominent professional profiles, while all other profiles have diminished in presence since 2019.
Additionally, the purchase of second homes has surged by nearly three percentage points over the last five years. The Valencian Community has also gained prominence, with its share of property purchases rising from 17.5% in 2019 to 29% today. In contrast, Andalusia and Catalonia have seen a decline in their market share.
One constant over time has been the average age of foreign mortgagors, which has remained steady at 45 years old for the past five years.
Snapshot of foreign demand for mortgages
In addition to formalised transactions, some studies examine the current demand for mortgages among foreigners. For instance, an idealista/hipotecas study for the second half of the year reveals that foreign applicants have an average monthly household income of €6,566, up from €4,726 at the start of 2022. Approximately 40% of these applicants earn over €6,000 per month.
Non-residents are requesting an average purchase price of around €233,400, reflecting an almost 10% increase year-on-year. The average mortgage loan amount is approximately €165,000. According to the idealista mortgage broker, 75% of applications seek less than €200,000, while only 5.4% request more than €400,000. This means that the average mortgage represents 74% of the purchase price, with an average level of indebtedness around 24%, which is below the 30-35% threshold deemed reasonable by experts.
The leading nationalities among foreign mortgage applicants are British (15.6%), German (14.5%), Dutch (8.5%), and American (8.1%). They are followed by the French (7.9%) and Swiss (7.8%), with other nationalities each accounting for less than 5% of the applications received by idealista/hipotecas.
Additional data from idealista's mortgage broker indicates that the average age of foreign mortgage applicants in Spain is 41. The majority prefer fixed-rate mortgages, making up 88% of cases, and they are predominantly interested in properties along the Mediterranean coast. The Valencian Community is the top destination for 28.1% of applications, followed by Andalusia at 21.6% and Catalonia at 15.5%.
Foreigners pay a record price to buy homes in Spain
Foreigners bought 63,183 homes in Spain in the second half of 2023, 10% less year-on-year; representing 20.9% of total transactions, below the two previous semesters. However, data from notaries place the average price paid by non-residents for properties above €2,700/m2, the highest figure on record. Only Asturias managed to break the record, while the Valencian Community accounted for 30% of the total. By nationality, the British continue to lead the ranking, while purchases made by Colombia
Foreigners applying for mortgages in Spain earn €6,000 and search for houses that are 20% more expensive
Every year, tens of thousands of foreigners decide to buy a home in Spain, regardless of whether or not they need to take out a mortgage. According to idealista/hipotecas, the profile requesting financing to buy a property in 2023 is a foreigner with an average income of almost €6,000 per month looking to buy a house for around €213,000 – 20% higher than the national average.