The Interest Rate Conundrum in Extremadura

Extremadura presents a unique situation in the Spanish housing market. In 2024,the region recorded an average mortgage interest rate of 3.59%,the highest in the nation,according to the College of Property Registrars. This contrasts sharply with the national average of 3.38%. The disparity is notably pronounced in variable-rate mortgages, wich saw a 0.40 percentage point increase in Extremadura, exceeding the national average by two-tenths of a point.

Experts suggest that the comparatively weaker negotiating power of Extremaduran borrowers, stemming from smaller loan amounts, contributes to these elevated rates. This highlights a potential vulnerability for residents in the region’s mortgage market.

affordability Amidst High Rates: A Closer Look

paradoxically, despite the high interest rates, Extremadura boasts the lowest average mortgage payments in Spain, at just €455.4 per month. This is considerably lower then the national average of €738. This affordability is primarily attributed to the smaller average mortgage amount in Extremadura, which stood at €90,828 in 2024, considerably less than the national average of €148,418.

To illustrate, regions like Madrid and the Balearic Islands, where average mortgage amounts exceeded €230,000 in 2024, saw average monthly payments soaring above €1,100 and €1,250, respectively.

The average amount of mortgages that were signed in Extremadura in 2024,the smallest amount of the country and far from the national average of 148,418 euros to which the mortgage loans were formalized

College of registrars

Rising Costs and Salary Effort

While Extremadura enjoys relatively low monthly payments,it’s certainly worth noting that these payments increased by 7.4% in 2024, exceeding the national average increase by three percentage points. This indicates a growing financial burden on homeowners in the region.

However, when considering salary effort – the proportion of income dedicated to mortgage payments – Extremadura fares well. Residents allocate approximately 24.7% of their salary to mortgage payments, the second-lowest percentage in Spain, trailing only La Rioja (24.3%) and nearly six percentage points below the national average. This suggests that, despite rising costs, mortgages remain relatively manageable for Extremaduran homeowners.

Market Dynamics: Growth and Protected Housing

the Extremaduran mortgage market experienced robust growth in 2024, with a notable 11% increase in mortgage loans signed, totaling 6,974.The province of Cáceres saw a particularly extraordinary surge of 25%. However,Badajoz,while accounting for a larger volume of formalizations (4,488),experienced a more modest increase of 4.7%.

A striking feature of extremadura’s housing market is the prevalence of mortgages on protected housing (subsidized housing). These accounted for over 20% of all mortgages in the region, more than three times the national average of 6.6%. This highlights the importance of government-supported housing initiatives in Extremadura.

They were formalized in Extremadura on protected homes; It is the highest rate in the country, where the average of this market was 6.6%

College of Registrars

loan Terms and Future Outlook

The average term for mortgages in Extremadura was 25.3 years in 2024, slightly shorter than the national average of 24.8 years. This indicates a trend towards shorter repayment periods in the region.

The Extremaduran housing market presents a complex picture.while high interest rates pose a challenge, the smaller average loan amounts and the prevalence of protected housing contribute to relative affordability. The region’s unique dynamics warrant close monitoring as economic conditions evolve.