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European Mortgage Growth Is Bad, but Not as Bad as It Seems

European mortgage growth seemed to have fallen off a cliff in May 2023 declining to 1.8% YoY from 3.0% in April. This would have been the lowest level in level in over 7 years (since September 2015) and the sharpest decline in growth on record.


Indeed, the decline was so shocking, that we had to look twice and found the following:

Adjusted mortgage loan growth was „only“ down to 3.3% in May from 3.9% in April (both YoY). This is still a bad trend but does not indicate a complete disaster like unadjusted figures. ECB adjusts for loans that leave bank balance sheets without expiring. This can for instance be write-offs, which is unlikely given the magnitude of adjustments or sales & securitisitations. The latter might well explain the huge difference between adjusted and unadjusted numbers in May.