Finance
Bank of Spain steps up oversight of lending as mortgages rise
Published by Global Banking & Finance Review®
Posted on November 14, 2025
2 min readLast updated: January 21, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on November 14, 2025
2 min readLast updated: January 21, 2026
The Bank of Spain is increasing oversight on mortgage lending due to a sharp rise in new loans, aiming to prevent risky borrowing and maintain economic stability.
By Jesús Aguado
MADRID (Reuters) -The Bank of Spain is stepping up oversight of credit standards after a sharp increase in new mortgage lending, it said on Thursday in its semiannual financial stability report.
The central bank is developing a framework that would allow it to activate macroprudential limits on lending standards to prevent risky borrowing, when needed. Any eventual application would require further analysis to ensure measures are appropriate for Spain's economic conditions, it added.
The bank noted that "conditions for granting new mortgages show no signs of significant easing," with loan-to-value ratios rising only moderately since 2023 to 68.7% in the first half of 2025, to around the average for 2004–2025.
It also said vulnerabilities in the property market remain far below those seen before the housing crisis in Spain in 2007.
The review comes as new mortgage loans jumped 26% year-on-year in the second quarter, hitting their highest level in a decade, though still well below volumes seen between 2000 and 2008.
Spanish lenders offer the second-lowest mortgage prices in the euro zone after Malta, with an average rate of 2.66% as of September versus a 3.32% euro-zone average, ECB data show.
Banks are trying to counter lower margins with higher lending volumes, driven by Spain's solid economic performance.
Last month, Santander and Bankinter warned of "irrational competition" in mortgages, with some rates falling below market prices.
The tighter monitoring of standards comes as home prices have in real terms risen - partly due to constrained new supply - at an annual rate of 10.3% in the second quarter.
Prices remain 17.7% below the peak reached around the third quarter of 2007, before Spain's real estate bubble burst, bringing property prices as much as 40% lower, stoking unemployment and prompting a bailout for the banking sector.
The central bank also cautioned that a projected pickup in housing construction was still falling short of meeting new demand in 2025.
(Reporting by Jesús Aguado, editing by Andrei Khalip)
A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral for the loan.
Macroprudential regulation refers to financial regulations aimed at mitigating systemic risks in the financial system as a whole.
Credit growth is the increase in the amount of credit available to borrowers, often measured by the growth in loans issued by banks.
Financial stability is a condition where the financial system operates effectively, with institutions able to manage risks and absorb shocks.
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased.
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