Spanish mortgage completions July 2013

Last week the INE in Spain published the monthly Spanish Mortgage completions for July of this year.

The report from the INE in Spain outlines how many loans were registered in July versus mortgages cancelled and redeemed along with information on the regional numbers and split of type of lending.

Key data

Spanish Mortgages for urbanized homes made up  48.4% of all capital lent, with country properties only making up 8.9% of the capital lent and land loans 13.6% of capital lent.

91.2% of all Spanish loans completed in the month of July were on a variable rate basis. The Euribor remained the favorite index for variable rate loans. Fixed rate mortgages were used in only 8% of all transactions. Average interest rates for July were 4.40% for Spanish mortgages granted on homes rather than commercial which was slightly lower than the rates of July 2012.

July figures showed the number of mortgages completed in Spain dropped by 42% as of the same corresponding month in 2012. The average value of each granted mortgage increased from June 2013 but the number of new residential mortgages dropped 2% from the month of June and the current year on year decrease now stands at 26.1% less than the previous year. The amount of total capital lent in 2013 to date has fallen by 29.3% from the same time in 2012.

Redemptions and Subrogation

Spanish Banks are reducing each month the amount of loans they are completing under subrogation. Subrogation allows new buyers to take over existing loans. The Banks are moving away from regularly agreeing subrogation because existing loan deeds have historic and preferential rates than new loans. In July 2013 subrogation of mortgages dropped by 58% in comparison to July 2012.

Year on year and for at least 24 consecutive months mortgages cancelled outstripped the amount of new loans completed both in turn of numbers and capital. The number of loans redeemed for residential homes was 24,599 in July and number of new loans completed on residential homes totaled 13,777. July saw the highest net outflow from the Banks mortgage books since the crisis began.

Their appears to be a big gap in the market for a new lender in Spain.

Google searches how relevant are they

A recent article in OPP magazine asks the question as to whether Google is friend or foe for business trying to get their messages out to the buying public.

Immaterial of whether business itself believes the search engine serves their marketing requirement perhaps a more important question is “do Google still provide the service they did to the public when searching for relevant information”.

Quotes from Google themselves state that the recent Penguin and Panda changes penalize businesses that have spent money on trying to boost their rankings and benefits those that spent time on the quality and content of their sites. What a load of baloney.

I am sorry but logic says that it follows that in general those companies that spent money on optimization also spent money and time on keeping their sites relevant and pertinent to the search terms they were trying to access. Why spend lots of money on site optimization just to have a site nobody was interested in. You spend money to gain clients, if the site is not relevant potential clients will not transact with you so all the money spent on ranking highly is wasted.

Of course a few sites will have focused entirely on optimization at the cost of the quality of the site but these will be few and far between. According to Jayson De Mers CEO of AudienceRoom the changes will benefit in the short term the small sites that engaged in quality content, building ethical links and avoiding sketchy techniques.

So let us put the quality of search theory to the test.

For many years International Mortgage Solutions the company I own ranked highly on page 1 of Google when searching under Spanish Mortgages, this is the activity we are expert in.

Yes "hands up" I have spent over the years various amounts of money on web optimization but I also have spent many hours and money on keeping my website up to date, relevant and user friendly.Since the changes of last year we have however disappeared on Google without a trace to pages 8 or 9.

Below is an analysis of the sites that have benefited from the changes and now rank on page 1 and lets look at what kind of "quality" they are providing to serious clients who actually want to have a mortgage in Spain.

Of the first 10 sites showing we have

Euro residents – www.euroresidents.com/property/spain_mortgages.htm This is a portal for everything Spanish who have a small and out of date section on Spanish Mortgages. They guide you to Orange Finance who if you then search on net appear to no longer exist.

Which magazine- www.which.co.uk nothing wrong with the article as you would expect from Which but the information relates to some years ago and was written some years ago so bears no resemblance to the current situation on Spanish Mortgages.

Spanish mortgage services- Lifted content straight from my website but as it was some years ago before various changes to the market. This means the content is now out of date and was not in fact written by them and would have been duplicate content at some point. Best of all they did not even bother reading it properly because in one paragraph it actually says "at IMS "which is the trading brand I use.

Mortgage direct sl- Again all information is out of date by some years. They talk of margins above Euribor of 0.45% when in fact you will now not get less than 3.6% above, they also state they can do lifetime loans when the two providers of this type of product left Spain some 4 years ago, and interest only mortgages which are no longer available.

 International Private Finance - On enquiry to them only do loans above 500k and take fees upfront. Promote a rate table that states rates correct as of 3/9/2012.

Europa mortgages - Almost the best of all as they make a big statement that you will find lots of information on many sites but unlike others they ensure their information is kept up to date. The text then relates to information from around 2009.

SPF- www.spf.co.uk/buyingabroad/spain/pages/lendingcriteria.aspx Last option on page 1 again lots of misinformation like minimum loan sizes are € 150k, (not true), and interest only is available.

So out of the 10 websites on page 1 of Google 7 are providing out of date and poor quality information. How on earth can this be good for the consumer? If you take this single search term and assume the Google changes have had the same affect across all search terms then it is probably just a matter of time before Google lose their number 1 spot as the obvious search engine.

Mortgage Default figures Spain behind the Headlines

 Spanish Banks published new default figures this week at close to 12% of their loan book.

In Spain defaults have increased over the last few years as the recession bites. Unemployment is at a record high and the last few months have seen an increase in white collar layoffs.The number of people in arrears is climbing but this is not the full picture.

Behind the Headline figures

Behind the headline figures which are bad enough in themselves there lies another story.

Due to Spanish Banks contracting their lending books with every month showing a net outflow of mortgages the default ratio is naturally climbing as a percentage of overall capital outstanding. If the Spanish Banks reduce their mortgage books it is inevitable the default ratio will increase.Part of the answer to reducing default ratios as a percentage of your book is to add performing loans at the front end.

Spanish Mortgages for both Spanish nationals and non residents are now difficult to achieve as lenders are working to very tight criteria’s making it difficult for applicants to meet risk parameters. Whilst sound underwriting is essential some of the tight criteria’s are knee jerk reactions to poor lending decisions of the past and preclude acceptable applicants from gaining a loan even though the likelihood of them defaulting is low. It is now necessary for all mortgage applicants to input a large amount of their own cash into the property transaction, this in itself encourages mortgage holders to perform as in a repossession scenario they not only risk losing the house, creating long term issues for themselves but also will lose the money they have put into the transaction themselves.

Pricing of loans is expensive partly due to cost of funds for the Spanish Banks and partly due to Banks trying to claw back profit. Particularly for non residents of Spain the current pricing is off putting when considering a Spanish Mortgage as are the practice of adding unnecessary and costly ancillary products as compulsory.

Banks in Spain are very focused on lending where the loan relates to the sale of one of their property portfolio. Whilst it makes some sense to offer deals to help sell the those applying for a loan to buy bank owned stock given most applicants applying to buy bank owned stock are looking for much higher loan to values and lower rates those looking for an independent loan, mortgages being added to the book are not necessarily improving the overall quality.

To enhance long term strength and overall profitability in the future Spanish Banks really need to consider a more diverse lending strategy than the rather negative strategy all are currently applying.