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    Home > Finance > Bank of Spain steps up oversight of lending as mortgages rise
    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 read

    Last updated: January 21, 2026

    Bank of Spain steps up oversight of lending as mortgages rise - Finance news and analysis from Global Banking & Finance Review
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    Tags:Mortgagesfinancial stabilitymacroprudentialcredit growthproperty market

    Quick Summary

    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.

    Table of Contents

    • Increased Oversight of Mortgage Lending
    • Current Mortgage Trends
    • Risks in the Property Market
    • Economic Factors Influencing Lending

    Bank of Spain Enhances Lending Oversight Amid Rising Mortgages

    Increased Oversight of Mortgage Lending

    By Jesús Aguado

    Current Mortgage Trends

    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.

    Risks in the Property Market

    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.

    Economic Factors Influencing Lending

    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)

    Key Takeaways

    • •Bank of Spain enhances oversight of mortgage lending.
    • •New mortgage loans increased 26% year-on-year.
    • •Spanish mortgage rates are among the lowest in the euro zone.
    • •Home prices have risen due to constrained supply.
    • •Projected housing construction falls short of demand.

    Frequently Asked Questions about Bank of Spain steps up oversight of lending as mortgages rise

    1What is a mortgage?

    A mortgage is a loan specifically used to purchase real estate, where the property itself serves as collateral for the loan.

    2What is macroprudential regulation?

    Macroprudential regulation refers to financial regulations aimed at mitigating systemic risks in the financial system as a whole.

    3What is credit growth?

    Credit growth is the increase in the amount of credit available to borrowers, often measured by the growth in loans issued by banks.

    4What is financial stability?

    Financial stability is a condition where the financial system operates effectively, with institutions able to manage risks and absorb shocks.

    5What is a loan-to-value ratio?

    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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