Large banks cut fixed-rate mortgage margins by 65.3 percent
Large banks cut fixed-rate mortgage margins by 65.3 percent during Spain's 2022-2023 tightening cycle. Bank of Spain research by Miguel García-Posada Gómez and María Rodríguez Moreno, published October 19, 2026, links mortgage type mainly to bank characteristics.
Bank size shapes mortgage choice
Using Spanish mortgage data for 2019-2023, the authors attribute 89.8 percent of their model's explanatory power to bank characteristics, against 10.2 percent to borrower and contract characteristics.
Bank size alone contributes 62.5 percent.
Larger banks grant more fixed-rate mortgages across monetary policy conditions, consistent with greater capacity to hedge interest rate risk.
During tightening, weaker repayment capacity ceased to be associated with adjustable-rate borrowing at large banks; the association persisted at small banks.
Banks more reliant on wholesale funding favored fixed rates during 2019-2021 but adjustable rates during 2022-2023, which the authors link to higher, more volatile funding costs.
Adjustable rates include floating and hybrid contracts.
Fixed-rate margins absorb tightening
Estimated fixed-rate margins at small banks fell from 170.1 to 100.3 basis points between 2019-2021 and 2022-2023, a 41 percent decline.
At large banks, they fell from 190.1 to 65.9 basis points, or 65.3 percent.
Adjustable-rate margins moved from 173.7 to 181 basis points at small banks and from 160.8 to 153.9 at large banks; neither change was statistically distinguishable from zero.
Fixed-rate margins subtract a maturity-matched swap rate lagged one month, assuming full hedging.
Large banks occupy the top asset decile.
Association is not causation
The authors caution that borrower selection and bank lending decisions jointly determine mortgage type.
Bank size can capture other persistent institutional characteristics, while income is approximated by postal code.
Unobserved cross-selling also limits what measured margins reveal about profitability.