Banks Urge Changes to Government Housing Guarantees Amid Spain's Soaring Prices
Spanish banks call for reforms to housing guarantee programs as property prices soar and uptake remains low amid the ongoing housing crisis.
- • Banks urge government to modify housing guarantee program to assist young buyers more effectively.
- • Only 10% of the €2.5 billion guarantees have been utilized, highlighting bureaucratic hurdles.
- • Housing prices reached a 17-year high, rising 10.4% year-on-year in 2025.
- • Mortgage signings increased 25% in the first half of the year, demonstrating high demand.
Key details
Spain is grappling with a serious housing crisis as housing prices hit a 17-year high, increasing by 10.4% year-on-year to €2,093.5 per square meter. This surge comes alongside a 25% rise in mortgage signings in the first half of 2025 compared to the previous year, underscoring heightened demand amidst affordability challenges. The government had introduced a €2.5 billion public guarantee program targeted at individuals under 35 and families with dependents to ease access to housing. However, banks have expressed frustration over the program's limited impact, with less than 10% of the guarantees utilized so far—only €189 million across 7,886 transactions, according to the Asociación Española de Banca (AEB) and the Ceca banking association.
The main issue banks raise is the timing and bureaucratic restrictions of the guarantee program. They argue that guarantees should be confirmed before mortgage formalization to facilitate smoother access and reduce administrative burdens. The current requirement for homebuyers to cover 20% of the property's value—usually not financed by banks—remains a significant barrier. The Instituto de Crédito Oficial (ICO), responsible for the guarantees, maintains that its criteria align with previous programs and expects banks to consider guarantees when clients qualify. However, with the guarantees set to expire on December 31, 2025, banks have formally petitioned the ICO and Economy Minister Carlos Cuerpo for adjustments to unblock the stalled uptake.
This institutional debate unfolds alongside broader economic discussions, with experts and officials addressing the housing problem alongside political controversies, including criticism of government figures such as Isabel Rodríguez. According to the hosts of the economic podcast 'La Brújula de la Economía', the housing crisis remains a central challenge impacting Spain's economic outlook and social stability. The convergence of steep price hikes, rising demand, and cumbersome policy implementation highlights the urgent need for coordinated reforms to improve housing affordability for Spanish citizens.
This article was synthesized and translated from native language sources to provide English-speaking readers with local perspectives.