How do new construction mortgages work?

The price of new construction homes in Spain has remained despite the health crisis. Changes in buyer preferences, due to the telecommuting boom and the lockdowns suffered, mean that residential needs have changed. “Housing is no longer just a place of passage, but of coexistence and daily professional and professional development, which requires the conditions that new housing can offer,” says Carles Solé, Tecnotramit’s Mortgage Formalization Manager.

“There are products that due to their location and access to the open air have even increased their price, due to their special adaptation to the current crisis,” explains the expert. Despite this, “it is not expected that the levels of new construction visas for the last five years will be reached until 2022”, warns Carles Solé, so the granting of mortgages to this type of housing “is not alien to the health crisis ”, He points out, and it will depend on the evolution of employment throughout the year.

Carlos Solé points out that, in order to minimize delinquency, which increases as unemployment increases and people cannot face their debts, financial institutions are demanding “an increase in the contribution of their own funds to applicants” . In other words, they are financing operations to a lesser extent.

In the expert’s opinion, “clients with more solvent profiles will continue to activate purchase operations”, and he adds that interest rates are low, so that “very attractive offers” can be found once the initial scoring has been passed.

Changes in funding

Carlos Solé warns of a trend that grew throughout 2020: the change of bank mortgage or creditor subrogation.

“According to the February report of the INE, the percentage of interannual variation of creditor subrogations reached a remarkable increase of 154%”, points out the expert, who adds that “even more shocking is the increase in the modification of conditions through the novation in the own entity, which increased by 280%. “

This large increase is due to various causes, says Carlos Solé, among which are included the acquisition of mortgages from the competition as a business channel for banks in the face of the fall in hiring or the use of this situation by customers, who see how they can promote savings by “reducing the monthly payment of their loan.”

“The clients have benefited from this new trend, since, even in the case of not completing the subrogation to another bank, they have been able to negotiate with his own entity a review of conditions by means of the novation of their mortgage loan taking advantage of the low rates of current interest and that, it seems, will remain that way throughout this fiscal year ”, assures Carlos Solé.

The technological innovation of banks

The expert also warns of changes in the trend regarding digital banking or ‘new banking’, which is gradually making its way over traditional banking. “The technological evolution in the real estate and mortgage market has been revolutionized in recent months.”

“From the customer’s point of view, it is evident that they gradually lose their fear and acquire greater knowledge and confidence in the advantages that technology brings, and access to a greater number of offers”, highlights the expert, who adds that “it allows also that the presence of private finance companies and investment funds is increasing and expanding ”, as an alternative to traditional financial entities.


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