Spain | Credit is growing again: Drivers, nuances and challenges

Summary

After more than a decade of deleveraging, the Spanish banking system has changed phases. In 2024, the credit balance to the resident private sector turned positive again, with contributions from both households and businesses, and this trend continued into the first months of 2025.

Key points

• Key points:
• This is a turning point after the long adjustment that began after the global financial crisis, only extraordinarily interrupted during the pandemic.
• Based on information available through July of this year, resident private sector credit increased by 2.4% year on year. Lending to households increased by 3.2%, while business loans increased by a slightly lower 2.2%.
• Consumer credit leads household growth at a rate above 6%, while mortgage loans grow at a rate in line with total credit, 2.4%.
• However, the most relevant change is observed in the mortgage portfolio, which represents more than three-quarters of credit to households.
• Activity, employment, and wage growth remain buoyant, sustaining demand. A low interest rate in relative terms also helps. In July, the average interest rate on a new mortgage was 2.6%. This was lower than the rates in Germany (3.7%) and the Spanish 30-year treasury bonds (3.9%).

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