Young foreigners are making headway in mortgage lending in Spain, says UCI

The new non-resident mortgagor profile in Spain shows that buyers are increasingly younger due to the increase in teleworking. They're mainly from countries like the United Kingdom, Germany, France and Belgium. However, according to an analysis by Uión de Créditos Inmobiliarios (UCI). US homebuyers "have made a strong entrance".

This represents a change in the traditional buyer profile, which used to be people between 50 and 60 years old, married with children, with a high level of education, earning more than €60,000 per annum. Now, on the other hand, younger buyers making headway are those who can 'work from anywhere'.

UCI points out that, following the pandemic, younger buyers are increasingly taking advantage of the fact that they can work remotely, so they don't have to wait until retirement to fulfil their dream of spending long periods on the Spanish coast.

As for the type of non-resident mortgages, the head of UCI points out that the maximum financing percentage does not usually exceed 70% of the property's appraisal or purchase value, as well as a repayment period of around 30 years, although there are exceptions.

Moreover, besides requiring a high level of savings, mortgage interest rates for non-residents are always higher than for foreigners who reside in the country.

According to data from the Association of Registrars collected by UCI, foreign property purchases shot up by 45% in 2022 to 88,800 transactions.

The 2023 figures "are optimistic", considering that the same organisation estimates that 23,380 operations by foreigners took place during the first quarter of the year.

This "optimism" is despite interest rate hikes, mainly due to relevant aspects such as Spain's attractiveness, good quality of life, affordability and the fact that the Spanish market is a safe haven and stable value for investments.

UCI also highlights that tax benefits, such as the 'Golden Visa' for investments over half a million euros, and the opening of new communication links are fundamental in attracting investment to Spain. Furthermore, according to a study by the platform MoverDB.com, "Spanish properties are the most sought after internationally".

"Although it depends very much on the country of origin, it is common for non-residents to apply for loans in Spain, as "the institutions in the country of origin would struggle to enforce non-payment", explains UCI's regional director, Dylan Leworthy. The reason given by the spokesman is that "they are not usually open to this type of operation".

Foreign profiles taking out mortgages in Spain

British, Germans and Swiss nationals request the most financing to buy a home in Spain. According to idealista/hipotecas data, these three nationalities represented 43% of the requests received from foreign customers in the second quarter, followed by Americans, Dutch, French and Irish.

On average, non-residents interested in signing a loan have an income of around €6,000 per month and are looking for homes costing an average of €210,000, which translates into a level of indebtedness of 24%. More than 70% of the mortgages signed are fixed rate.