Rise in mortgage lending raises concerns for the regulator
In 2025, Banco de España began discussing possible restrictions on issuing mortgage loans that exceed 80% of a property’s value. This move is aimed at preventing a new wave of instability in the housing market, given the sharp rise in prices and the growing number of mortgage applications. According to the regulator, the share of new loans with a high ‘Loan to Value’ ratio has reached its highest level in six years, raising concerns about the stability of the country’s financial system.
Situation analysis and development of new regulations
In recent months, experts at Banco de España have been closely studying trends in the mortgage market, analyzing historical data alongside current patterns. Special attention is being paid to conditions under which requirements for borrowers might be tightened, to avoid a repeat of the crises that followed the global financial downturn fifteen years ago. As part of preparations for possible changes, a theoretical framework is being developed and statistics on lending and banking standards are being compiled.
Risk reduction measures and international experience
After the 2008 crisis, Spain and other European countries introduced various mechanisms to protect the banking system, including the creation of an anti-crisis reserve, which was activated in 2023. Currently, additional measures are being discussed to limit risks associated with mortgage loans. These include introducing limits on the loan-to-value ratio, tightening income requirements for borrowers, and adjusting repayment terms. The European Central Bank supports such initiatives, noting that similar restrictions are already in place in several EU countries, while Spain is only considering their adoption.
Impact on the market and possible consequences for buyers
The banking sector is closely monitoring the situation. Some industry representatives warn that tighter rules could make it harder for certain groups—especially young people who already face challenges buying a home—to access mortgages. At the same time, some banks continue to offer high loan-to-value mortgages, particularly when backed by government guarantees or regional authorities’ support.
Outlook and next steps
Despite rising real estate prices, the Bank of Spain currently assesses the risks as moderate, citing stable lending standards and balanced indicators compared to previous years. A final decision on introducing new restrictions will be made after the analysis is completed and discussed at the regulator’s executive level. If approved, the measures are expected to strike a balance between preventing market overheating and maintaining credit accessibility for the population, ensuring sustainable development of the mortgage sector in the coming years.
