Spanish Residential Mortgage Market Update 2025

In this commentary, we provide an update on the Spanish residential mortgage market and an analysis of recent events that are shaping the trends within residential mortgage-backed securities (RMBS) transactions with collateral originated in the Kingdom of Spain.

Key Highlights:

-- The sustained upward trend of house prices is likely to continue throughout 2025.
-- We anticipate no deterioration in prime Spanish mortgage loans and potentially even an improvement in arrears and default levels, partly resulting from lower mortgage servicing costs, borrowers' lower indebtedness levels, and a positive unemployment outlook.
-- Greater credit concerns remain regarding Spanish mortgage portfolios composed of reperforming loans because of the more vulnerable nature of the underlying borrowers.
-- We believe that a potential decrease in delinquency levels caused by decreasing reference rates and improved affordability should strengthen the stability of Spanish RMBS credit ratings in 2025.