Home values and mortgage interest will fall further due to the health crisis
“The current covid-19 pandemic will cause a decline in banking activity,” was confirmed by numerous experts in March, at the beginning of this crisis, when no one knew how it would progress. Some real estate agencies even estimated a drop in mortgages of up to 60%.
This brings us to the new data revealed by the General Council of COAPIS of Spain, where they have affirmed that the house will lower its value further. However, it also shows that this could lead to a hardening of conditions when applying for a mortgage.
They claim that it will involve a “battle” between the different financial entities with the aim of releasing mortgages from one entity to another, which will benefit the consumer depending on their economic profile.
This new paradigm caused by the current Covid-19 pandemic has caused an incredible health crisis and a serious economic delay, causing damage to the labor market in a very radical way. Every day, the unemployment rate increases, which means that the furniture market does not rebound, but rather declines. This will cause the price of housing to fall even more, thus causing mortgage conditions to tighten, says Cayetano Rengel Pérez, vice president of the General Council of COAPIS.
The fall in the price of houses, in addition to having as objective an approach to the current economic situation of the country, makes the mortgage conditions more acceptable. Therefore, a “battle” is also expected between the different financial entities with the aim of releasing the mortgages from one entity to another, which will benefit the consumer, obviously depending on their economic profile.
Faced with this situation, we find two different profiles of consumers. On the one hand, we have those who are in a good economic situation and are not so affected by this pandemic, so they can buy homes at a lower price. And, on the other hand, there are those people who are very affected by this situation and are in a very delicate economic moment, so that they will have a greater problem with the supposedly even harsher mortgage conditions.
Current state of the real estate sale market
As commented at the beginning of this article, experts confirmed a drop of up to 60% in mortgages. Although it is true that they were not wrong, since only the sales of the first quarter of this year fell by 30%. So the next ones were expected harder, and so it has been determined.
In the second quarter its fall has reached 50%. Thus, positioning the third quarter with high percentages and, in turn, important, in the decline of any property, be it a home, office, hotel, premises, and others.
In summary, this last quarter should be characterized as an opportune moment to subsidize a home through a mortgage, however, as Cayetano Rengel Pérez tells us, “the future will not be anything promising if the virulence of the pandemic continues and the socioeconomic conditions are so problematic ”.
Therefore, we conclude that the health crisis will affect, above all, those who have an economically delicate profile. Given that the profiles that are in a stable situation will be able to take advantage of the situation to buy a home, as well as the drop in prices and mortgage interest, and they will be favored by the banks.
About the General Council of COAPIS:
It is the General Council of the Official Associations of Real Estate Agents (CGCOAPI) of Spain. It is a Public Law Corporation that represents and defends the interests of collegiate Real Estate Agents and the Associations in which they are registered, before the General State Administration, the Autonomous Communities, other powers or bodies of the State and international institutions.
Tags: mortgage interest
