Nearly half of Spanish mortgages fund investment, not primary homes

Nearly half of Spanish mortgages fund investment, not primary homes

An older apartment in a prime location. Someone buys it for 300,000 euros, invests 70,000 in a solid renovation, and resells it months later for 500,000. This is the house flipping that, according to one debate participant, summarizes the business: nothing is built, nor are there long-term rentals; properties are simply bought cheaply to sell at a profit. The latest report from the Spanish Association of Financial Users (Asufin) provides figures to what was already suspected on any real estate portal: the 47.7% of signed mortgages aim to acquire housing for investment purposes, compared to 15.9% financing a primary residence.

What Asufin’s report says about mortgages

The study was conducted via a survey of 1,301 respondents and official data sources. Its conclusions are stark: among those seeking bank financing, there is a stronger investor mindset than families looking for a roof. Another 18.5% seek credit for a second personal-use home, and 17.9% for changing their habitual residence. If the question is why the loan is requested, investment is the primary motivation for 65%.

The association itself acknowledges that this cycle “significantly strains the market.” This is no novelty: previous reports already reflected that more mortgages are taken for investment than for buying a home. The price per square meter has been climbing for years, and some estimate rental yields above 6%, far exceeding more traditional investments. Brick-and-mortar remains a safe-haven asset.

Cash purchases also hit records

In addition to mortgages, there are operations paid without banks. Between January and March, cash purchases accounted for nearly 35% of the total, the highest figure for a first quarter since 2014. The reading is simple: those with liquidity do not need financing, and much of that money goes into housing as an investment placement, not as a home.

The report adds more pieces. Foreign buyers account for 14% of the total, though in the Canary and Balearic Islands they approach 30%, while in a dozen communities they do not reach 4%. The flow of new housing entering the market is scarce. And fixed-rate mortgages have consolidated as the cheapest option.

Payments consuming 35% of salaries

Household financial effort has skyrocketed. Average mortgage payments now represent 35% of salaries, a percentage that rises to 40% among buyers aged 25 to 35. That is, those entering the market with less cushion are those who take on the most debt to get in.

There is a nuance that tempers the alarm: the percentage of buyers taking on debt for second homes for investment purposes has declined. At the beginning of the year, they represented 56.2% and now stand at 47.7%. It remains a huge slice of the pie, but the trend points to a slight correction.

Speculation or savings protection?

The issue divides opinion. One current argues that investing in housing generates nothing: it produces no goods or services, only captures a basic necessity and exploits those who cannot afford it. From this perspective, the investor does not offer housing to those who cannot buy it, but rather their own intervention contributes to making it unaffordable. It is argued that specific rules should apply to essential goods, although no one specifies how to implement them without breaking the market.

The counterargument comes from the opposite side: if savings evaporate with inflation in the bank, buying an apartment protects what was earned through work. They add that the investor provides liquidity to developers, allowing them to know whether to build or not, and offers rental housing to those who cannot assume a mortgage. The problem, they say, is not investment but the lack of land and protected housing. And they point to the State as the primary beneficiary: the buyer pays taxes at every link in the chain.

The fiscal cost accumulating with each sale

A calculation circulating in the debate explains why the exit price never drops. A home built in the early 1990s accumulated property tax (IBI), VAT, and transfer taxes (AJD) equivalent to an 11% cost surcharge. Today, after passing through four owners, this accumulated surcharge hovers around 52%. Each owner recoups what was paid by inflating the sales price. Taxes do not dissolve; they pile up.

The proposal generating the most consensus in the diagnosis is the massive construction of social rental housing, or rental with an option to purchase after ten years. The precedent applied in Spain during the Franco era is cited, when rent controls and the push for social housing worked. Bureaucracy and land scarcity are also pointed to as real brakes.

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The surprising figure is not 47.7%. It is that housing has become the safe-haven asset for a middle class finding no other alternative. With payments consuming 40% of young people’s salaries and a new supply that fails to arrive, the market is strained not by excessive greed, but by a lack of alternatives.