Finance
Analysis-Spanish consumer credit hits near 18-year high on economic boom
Published by Global Banking and Finance Review
Posted on December 19, 2025
4 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 19, 2025
4 min readLast updated: January 20, 2026
Spanish consumer credit hits an 18-year high, driven by economic growth and a shift from mortgages to consumer loans. Government plans to cap high-interest rates.
(Fixes typo in sign-off)
By Jesús Aguado
MADRID, Dec 19 (Reuters) - Consumer lending in Spain has hit levels not seen since the eve of the global financial crisis, reflecting both the Spanish economy's strength and a shift in focus from mortgages to more profitable but riskier credit among the country's banks.
Lending in Spain plummeted after the 2008-2009 crisis, but consumers have been emboldened by the Spanish economy, which has grown at double the rate of the European Union average this year with expectations it will outpace the bloc again in 2026.
"We still believe that there is more room for growth in consumer lending in a healthy way as the labour market is very solid," said Javier Gaztelu, deputy managing director and head of lending and payments at Sabadell.
Sabadell's performing consumer loan book rose 19% year-on-year as of September, above a 5.6% mortgage loans increase.
SPANISH POPULATION REACHES RECORD
Gaztelu said a jump in the workforce since the end of 2019 was driving lending, as an influx of foreign workers pushes Spain's population to a near 50 million record.
New consumer loans reached almost 4.5 billion euros in October, a 21.8% year-on-year rise and the highest monthly total since 2007, official data shows.
That stands in contrast to the wider euro zone - an ECB lending survey in October showed a moderate tightening for consumer credit because of concerns about the economic outlook.
Renta 4 analyst Nuria Alvarez said consumer credit would be a key driver for Spanish banking profitability in 2026, alongside corporate lending, asset management and insurance.
BAD DEBT RATIOS TICK HIGHER
Unsecured consumer lending can be risky for lenders.
Bad debt ratios on these loans rose to slightly above 4% in October - almost twice as high as defaults on mortgages - but a far cry from the 8.3% peak in June 2009.
Bankinter has this year reduced its exposure in some higher-risk consumer portfolios but Spain's fifth-biggest lender is an exception.
The appeal for banks is clear.
Returns on consumer lending averaged almost three times the 2.67% earned on mortgages in October, central bank data shows, with mortgage returns squeezed by falling interest rates.
Elvira de la Cruz, from mid-sized lender Unicaja, told Reuters she expected consumer lending to "continue growing in the coming years", although at a lower pace.
Spanish banks' overall consumer loan books rose 7.2% year-on-year to 105.9 billion euros at end-June, just below their all-time high reached in July 2008.
Consumer credit accounts for 8.7% of overall lending, up from 8.3% last year and 5.8% before the crisis, a Reuters analysis shows.
Unicaja plans to double its new consumer loans by 2027.
"You are targeting known customers with stable incomes that minimises any potential default, since more than 50% of new consumer credit is channelled through pre-authorised loans," said De la Cruz.
For BBVA, Spain's second-largest lender, its consumer lending and credit card business was growing six times faster than its mortgage book as of September.
GOVERNMENT TO CAP RISKIER LOAN RATES
Concerns about mainstream bank lending are limited while employment remains strong.
But Spain's government is increasingly worried about the growth in unregulated firms issuing high-interest loans that store up big problems for vulnerable borrowers.
In the next few weeks, the government will begin a process that would include setting caps on rates on revolving credit lines, a government source said, adding that actions are part of a wider set of measures to implement an EU directive.
Those loans start with annual rates of 18% that can soar beyond 1,000%, creating an endless debt spiral because of the combination of very short repayment periods and fixed fees.
Instead of reflecting Spain's strong economy, demand for these loans showed the financial precariousness of many, with wages failing to keep up with the cost of living, the head of research at consumer association Asufin Antonio Gallardo said.
"There are people who need financing for their day-to-day lives, who are excluded, even from credit cards, and who turn to microloans. Microloans have exorbitant interest rates," he said.
(Reporting by Jesús Aguado; Additional reporting by Jesús Calero; Editing by Tommy Reggiori Wilkes and Alexander Smith)
Consumer credit refers to loans and credit extended to individuals for personal use, typically for purchasing goods and services. It includes credit cards, personal loans, and installment loans.
Bad debt ratios measure the percentage of loans that are not expected to be repaid. A higher ratio indicates greater risk for lenders, reflecting potential defaults among borrowers.
A mortgage is a type of loan specifically used to purchase real estate. The property itself serves as collateral for the loan, which is paid back over time with interest.
Banks provide consumer lending by offering loans and credit to individuals. They assess creditworthiness, set interest rates, and manage the risks associated with lending.
The ECB lending survey provides insights into credit conditions in the eurozone, indicating trends in lending practices, demand for loans, and banks' risk assessments.
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