Determinantes de la modalidad del tipo de interés de las hipotecas y evolución de sus márgenes durante el período de endurecimiento de la política monetaria 2022-2023

Series: Occasional Papers. 2620.

Author: Miguel García-Posada Gómez and María Rodríguez Moreno

Monetary policy

• Interest rates
• Transmission of monetary policy
• Spain

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Determinantes de la modalidad del tipo de interés de las hipotecas y evolución de sus márgenes durante el período de endurecimiento de la política monetaria 2022-2023 (649 KB)

Abstract

Rationale

Fixed-rate mortgages in Spain have shifted over the past few years from being a minority product in new mortgage lending to becoming the dominant mortgage type. This paper investigates the factors associated with this transformation and the evolution of mortgage margins, using granular data and several econometric analyses to compare borrowers, loan contracts, and banks before and during the recent period of monetary policy tightening.

Takeaways

• Among the factors determining the mortgage type, those considered to be supply-side factors, linked to the characteristics of lending institutions, appear to have greater explanatory power than the demand-side factors considered, which are related to borrowers' characteristics. In particular, larger banks show a greater propensity to grant fixed-rate mortgages.
• In a low interest rate environment, lower borrower repayment capacity was associated with a higher probability of taking out adjustable-rate mortgages (floating-rate or hybrid adjustable-rate mortgages). During the period of monetary policy tightening, this relationship disappeared among large banks but persisted among small banks.
• Margins on fixed-rate mortgages narrowed following the monetary tightening episode, especially at larger banks. By contrast, margins on adjustable-rate mortgages remained broadly unchanged, regardless of bank size.