Spain's banks are not being arbitrary in limiting small mortgages; they are responding to economic reality. Processing a €60,000 loan requires the same due diligence, property valuation, and legal paperwork as a €300,000 loan, yet the interest income is far lower. At current margins, many small loans barely break even, especially when considering potential default costs.
Regulatory requirements, such as the Bank of Spain's responsible lending guidelines and European capital adequacy rules, add further costs. Banks must set aside a percentage of the loan amount as capital, and for smaller loans that percentage can be proportionally higher against the interest earned. Lenders argue that turning down such loans is not discrimination but prudent business, necessary to protect depositors and maintain financial stability.
Furthermore, small mortgages often go to borrowers with less stable employment or lower incomes, which can increase risk. Banks have a duty to avoid excessive risk-taking that could lead to future non-performing loans. Rather than criticize lenders, analysts say the focus should be on making small loans more cost-effective through digitalization or government guarantees. Until then, caution is the responsible path.