The Loan to Value Ratio for Housing in Spain Over the Period 2004-2016

13 Pages Posted: 12 Feb 2019

See all articles by Olympia Bover

Olympia Bover

Banco de España - Research Department; Centre for Economic Policy Research (CEPR)

María Torrado

Banco de España

Ernesto Villanueva

Banco de España - Research Department

Date Written: February 12, 2019

Abstract

The ratio between the amount of mortgage loans and the value of housing (the loan to value ratio) is a useful indicator for studying the financial situation of households. Two main price indicators are used to measure loan to value ratios for housing in Spain at the time of purchase: the transaction price recorded at the Property Registry and the appraisal value. Having generated a sample in which both price indicators refer to the same set of housing, the median loan to value ratio between 2004 and 2007 is found to stand between 70%, when the appraisal value is used, and 107%, when the transaction price is used. The difference between these two ratios narrowed from 2010, with the loan to value ratio using the appraisal value remaining at around 70%, while the ratio based on the transaction value fell to 80%. The Spanish Survey of Household Finances (EFF), conducted by the Banco de España, is an alternative data source, allowing a loan to value ratio to be obtained directly from households’ responses. This ratio, based on EFF data, has evolved in a similar way to the one derived from the transaction prices recorded at the Property Registry.

Keywords: mortgages, house prices, loan to value ratio

JEL Classification: D14, G21, E21

Suggested Citation

Bover, Olympia and Torrado, María and Villanueva, Ernesto, The Loan to Value Ratio for Housing in Spain Over the Period 2004-2016 (February 12, 2019). Banco de Espana Article 2/19. Available at SSRN: https://ssrn.com/abstract=3333102 or http://dx.doi.org/10.2139/ssrn.3333102

Olympia Bover (Contact Author)

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain
+34 91 338 5979 (Phone)
+34 91 338 5678 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

María Torrado

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Ernesto Villanueva

Banco de España - Research Department ( email )

Alcala 50
28014 Madrid
Spain

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