For years, the golden rule in Spain’s mortgage market has been that banks rarely finance more than 80% of a property’s value. But times are changing. According to the latest report from the Asociación Hipotecaria Española (AHE)or the Spanish Mortgage Association, nearly 9% of new mortgages in Spain now exceed that threshold. This marks the highest level of high loan-to-value (LTV) lending since 2022.

This means that more homebuyers in Spain are taking on mortgages that exceed 80% of the property’s value, the highest proportion recorded in over two years. While still below the peak levels seen before the 2008 financial crisis, this increase suggests a return to riskier lending practices. It reflects growing pressure on buyers who are struggling to save for a deposit as property prices rise faster than incomes, and banks are loosening limits to attract borrowers in a competitive market.

Why the Shift?

Several factors are pushing this trend. Rising house prices, especially in city centres, are making it harder for buyers to save the traditional 20% deposit. Meanwhile, falling interest rates across the eurozone are encouraging banks to compete for new customers, sometimes relaxing their LTV caps for those with steady income and good credit.

Buyers can now afford slightly larger loans because monthly repayments are still relatively low, even with higher borrowing amounts. Banks are also keen to lend more to offset reduced profit margins due to interest rate cuts.

Help for Young Buyers

The increase in high-LTV mortgages is not just down to banks being more generous, it’s also thanks to new government-backed guarantee schemes. Both the national government and regional administrations like those in Madrid and Andalucía have launched programmes that help young buyers, often under the age of 40, purchase homes with little or no upfront deposit.

These schemes allow public guarantees to cover part of the mortgage beyond the usual 80%, offering a vital leg-up for those with steady jobs but little savings.

Weighing the Risks

Despite the growing availability of low-deposit mortgages, financial experts are cautious. High-LTV loans carry greater risk if the housing market stalls or declines, leaving borrowers more exposed. Fixed-rate mortgages are gaining popularity as a way to protect against future volatility.

In fact, fixed-rate deals now represent nearly 70% of new mortgage contracts in Spain. The trend has accelerated in line with European Central Bank rate cuts and greater uncertainty in global markets.

Is It for You?

Yes, it’s increasingly possible to buy property in Spain with less than 20% down, but not everyone qualifies. Banks are still strict about income stability, credit history, and debt ratios. If you’re a young professional or relocating expat with a solid financial base, you might benefit from these changing dynamics.

For others, it’s worth saving a little longer or looking into public programmes designed to make buying more accessible.

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