THE Bank of Spain has ruled out the existence of a housing bubble and says there is currently no need to impose restrictions on mortgage lending, despite continued rises in house prices across the country.
The central bank has reassured investors that the property market is still far from the levels seen before the 2008 financial crisis, with house prices remaining around 15% below their previous peak.
In its latest Financial Stability Report, the central bank said today’s market is being driven more by high demand and a shortage of homes than by risky lending from banks.
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Officials said mortgage conditions are also much stricter than they were before the crash.
The average mortgage now covers just over 80% of a property’s purchase price, compared with almost 110% during the years before the housing bubble burst in 2008.
When compared with the official valuation of the property, the figure drops to 69.7%.
The Bank of Spain is also preparing a study to see whether new rules for the mortgage market may be needed in the future, although no decisions have been made yet.
Daniel Perez Gil, the Bank of Spain’s Director of Financial Stability, said the study would focus on the quality of loans and how they affect households, rather than limiting how banks offer mortgages.
The report said that although property prices are continuing to rise, the wider market remains much healthier than it was before the financial crisis.
It also looked at mortgage growth, household debt and overall property activity, which are all much lower than the levels seen nearly 20 years ago.
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Mortgage lending has continued to grow steadily, with outstanding mortgage balances rising by 3.7% at the end of last year.
Even so, the Bank of Spain said mortgage debt remains ‘contained from a historical perspective’ and is still far below the levels seen between 2000 and 2008.
The report also dismissed fears of a mortgage price war between banks, saying competition has eased in recent months while the shortage of homes continues to push prices higher.
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