Spanish banks are becoming increasingly reluctant to grant mortgages for second homes, it has emerged, even as demand for holiday properties remains strong.

New figures from Idealista show a striking gap between the number of people seeking finance for a second property and those who actually manage to secure a mortgage.

In July, mortgages for second homes accounted for just 2.2% of all loans completed through Idealista’s mortgage broker, representing the lowest proportion since August 2023 and one of the lowest figures recorded since its data series began in 2018.

Yet second homes represented 8.1% of all mortgage applications received during the same month.

That means demand for financing a holiday or weekend property was almost four times greater than the proportion represented by successfully completed mortgages.

According to Idealista, several characteristics of second-home mortgages make them less attractive to banks than loans used to purchase a main residence.

What’s the issue?

Juan Villen, managing director of Idealista/hipotecas, says one important factor is the cost banks incur every time they issue a mortgage.

Since Spain’s mortgage law changed in June 2019, lenders have been responsible for paying several of the costs involved in formalising a mortgage, including notary fees for the mortgage deed, Land Registry costs, Stamp Duty and administrative fees.

The borrower generally pays only for the property valuation and any additional copies of the deed they request.

That creates a particular problem with smaller mortgages.

‘Because banks have to pay the mortgage costs, the smaller the amount, the more expensive it is for the bank,’ Villen explained.

‘And many drag their feet when the requested mortgage is below €100,000.’

Second-home mortgages tend to be substantially smaller than those taken out to buy a main residence.

Over the past 12 months, the average mortgage granted for a second home has been approximately €135,400, compared with more than €213,400 for a primary residence.

The difference was even wider in July, when the respective averages stood at €127,294 and €216,882.

Wealthier borrowers can be less profitable

Meanwhile, the buyers can be too financially secure.

People purchasing a second property often already own their main residence outright or have a relatively strong financial position.

As a result, Villen says they frequently repay their mortgages more quickly, reducing the amount of interest a bank can earn over the lifetime of the loan.

The average term for a second-home mortgage over the past year was 24 years, compared with 29 years for mortgages on primary residences.

So from a lender’s perspective, the typical second-home mortgage can involve a smaller amount of money, similar upfront administrative costs and a borrower more likely to repay the debt early.

Buyers reluctant to shop around

Idealista also notes that many second-home buyers are reluctant to switch banks.

Borrowers may already have a longstanding relationship with the bank that financed their main home and can be tied to it through other products, including insurance policies and salary payments.

Consequently, they often approach their existing lender for a second mortgage rather than comparing offers across the wider market.

Idealista argues this can prevent borrowers from accessing more competitive deals.

Villen said it was ‘a shame’ that consumers were missing out on some of the market’s best offers because of mortgage costs and the financial products tying them to individual banks.

‘As long as these remain, banks’ interests will continue to restrict the options for anyone looking for a mortgage for their house on the beach or in the mountains,’ he said.

Second homes still in strong demand

The figures suggest the financing squeeze should not be mistaken for declining interest in owning a holiday home in Spain.

Second homes accounted for 8.1% of mortgage applications in July, making them the second-largest category behind primary residences, which represented 83.4%.

Applications for second-home financing were more than double those seeking to improve the terms of an existing mortgage, at 4%, and those submitted by non-residents, at 3.1%.

But the picture changed dramatically when looking at mortgages actually completed.

Primary residences accounted for 89% of completed mortgages, while second homes collapsed to just 2.2%. Mortgage improvements represented 4.4% and non-resident loans 3.5%.

Rising prices add further pressure

The financing difficulties come as the cost of owning property in Spain’s most popular second-home destinations continues to soar.

According to recent figures from Tinsa by Accumin, average property prices in Spain’s coastal municipalities – excluding provincial capitals – reached €1,992 per square metre during the first quarter of 2026.

That represented an annual increase of 13.5%.

The affordability burden has consequently climbed to around 40% of the average household’s disposable income, exceeding the maximum level generally recommended by experts.