Benefits of using a mortgage broker in Spain

Obtaining the best mortgage in Spain

Unlike other countries whilst Spanish Banks issue guidelines on minimum terms and conditions for loans, to their branches, local management are left with discretion to alter these as long as they do not go below the minimum stipulated.

This practice means that what a direct mortgage applicant may get offered, if they walk into one branch of the same bank, may vary to what they would achieve if they selected anoher Branch.

Branch managers can and do increase the rates and insist on compulsory products not normally attached to the loan in order to enhance their overall profitibilty.

If a direct client happens to apply for a loan when that months targets have been met they may find a very unattractive home loan is offered on the basis the Branch only want the application if it is going to offer them an unuaslly high level of profit.

With no central control on what terms and conditions can be offered direct clients of the bank may not be getting the best deal possible.

An independent and experienced Spanish mortgage adviser will know what are the best rates possible within any Bank and will ensure their client gets underwritten with this in mind.

Clarity on the application process

Applicants who apply direct to Banks often believe due to staff feedback at the Bank that the application is further down the approval process than it is. Many clients think they have a mortgage offer when all they actually have is an acceptance to look at an application. A loan is Spain is never secure until the file has been sent to the central risk teams and a valuation has been undertaken.

Some Banks, if you apply direct inisit a valuation is undertaken before a risk assesment is made on the financial data so sometimes even after valuation has been paid for you cannot be certain your loan is secure.

Independent advice

Appointing an independent advice company to work on the buyers behalf at each stage helps avoid confusion, ensures the process is clear and quick and most importantly ensures the best `possible terms and conditions are secured. 

Read the full article:- Mortgage brokers in Spain

Loan completions in Spain

September mortgage completions

Good news for lending in Spain was published yesterday with another month of increases in terms of both numbers of new loans constitued and capital lent.

The level of home loans between the month of the August and September was the highes for many years and overall numbers of credits granted for the same month of the previous year was up 29.83%

2013 versus 2014

Whilst the number of mortgages in Spain has increased for the last few months, due to very low levels of activity in the first quarter, 2014 remains slightly behind the levels of the same time in 2013. The current trend however if followed through in the final quarter of 2014 should mean that for the first time in over 6 years we see either a level or slight increase in total loans on a year on year basis.

Interest rates

Average interest rates fell in September due to a continuing drop in Euribor which most Spanish Banks track and an easing of margins. 

Overall mortgage books

Whilst yet again the amount of mortgages redemmed outstripped new loans completed the gap has narrowed considerably. After many years of loan books reductions this will be positive news for the Banks who for the first time this year since 2007 have had lending targets. Whilst it is unlikely the lending targets will be achieved by most Banks the signs are positive for a better 2015.

Read the full article:-Spanish news. Positive signs for Spanish lending

Year on year increase in Spanish borrowing

August lending data

The number of new Spanish mortgages registered at land registry in August showed another upturn when looking at the same month of the previous year.

Capital lent also increased year on year when looking at the corresponding month of 2013 and the average loan size increased to a point that took loan sizes above the level for the same period of time in 2013.

August completions versus July 

Whilst the news on August numbers when compared to the same time last year was all good the decrease between the numbers of loans secured against homes in August when compared to the month of July was the highest for 5 years. This would appear to be due to an unusually high level of activity in July this year.

Types of Loans

As is normal in Spain the majority of borrowers took lending on a varibale rate basis. Loans with a fixed rate only made up just over 6% of total completions. The average interest rate on which new mortgages completed is down in the last 12 months by over 12 months. Whilst this is partly due to more competative products being launched by the Banks in Spain the biggest driver of lower rates is the decrease in the 12 month Euribor.

The 12 month Euribor continued to be the most favoured index used.

Diffences in Regional activity

Andalucia continued to be the region with highest number of new loans constituted  followed by Madrid and Barcelona. Only the Balearics showed an increase in numbers in August against July and of the non resident favoured markets only the Canaries dropped when looking against the same month of the previous year.

Net outflows

The rate of net outflows narrowed slightly in August suggesting that rate at which mortgages redeem to new finance being taken is slowing and the gap diminishing. After many years of shrinking mortgage books this will be good news for the Banks.

Read the full article: Number of new borrowers increase in August

Positive news for Spanish Mortgage completions

July mortgage data from the INE in Spain published today showed an increase in mortgage completions both year on year and month on month for the first time in many years.

Numbers of new Spanish loans

Numbers of loans granted relating to residential dwellings were up 28.8% from the same month of the previuos year. Due to slightly lower loan sizes the capital lent was only up 0.3% but the trend is moving in the right direction.

July is the second month in succession that an increase when related to the same month of the previuos year has been upwards. This strengthens the belief that mortgage availibilty is improving as over the last 5 years it has been normal for the number of mortgage completions in July to be below those of the previuos month of June and in July this year more completions took place than in June.The mortgage application process continues to volatile but more cases are now being accepted by the risk teams as commercial pressures to complete on loans increases.

Interest rates

Variable rate loan types continued to be the basis on which over 90% of mortgages completed with only 6.2% of loans completing on a fixed rate. Most Spanish loans competed linked to the Euribor with a small amount being linked to the IRPH replacement BPT. Banco Popular now seems to be one of the few Banks using the Spanish home loan index.

Average interest rates for July were 3.9% a 7.7% reduction on average rates for the same month last year. This is partly due to a decrease in the 12 month Euribor but more to do with drops by the Spanish Banks in interest margins charge as competition for new loans contnues to increase.

Regional performance

Andalucia and Madrid were two of the top regions in numbers of loans granted with only Castilla, of the major regions, showing any decrease.

Mortgage book outflows continue to outstrip new loans

For yet another subsequent month the amount of loans redeemed continued to exceed new loans constituted by around 6,000. This seems to be the only issue in what otherwise is a positive trend. With mortgage targets back in place this year Spanish Banks will be hoping that before the year end the net outflow of capital lent and numbers of loans granted starts to outstrip the loans canceled so they can slowly rebuild their mortgage books with profitable and perfroming loans.

Read full article: Spanish banks increase lending in July

Spanish mortgage market update

Mortgage enquiries on the increase in Spain

With prices being reported as rising in Spain and this trend expected to continue many potential buyers are starting to consider whether 2014 is the right time to buy and what finance facilities are availble for non resident buyers.

In tangent with a drop in demand on the purchase side caused by the economic difficulties in Spain and the overall uncertainties the same issues affected the spanish Banks and it has been widely reported that over the last few years Spanish Banks had pretty much withdrawn from lending.

Whilst the no lending was somewhat overstated it has never the less been diffcult to secure borrowing in Spain since 2008 and product terms for those requiring borrowing have been pricey.

New mortgage terms and conditions

The floodgates are by no means open but bit by bit as 2014 has progressed we have seen significant changes in the mortgage market in Spain. Slowly but surely the Banks have started to raise loan to values for private purchases, decrease margins above Euribor and relax stringent and in some cases impossible criterias.  

Access to Spanish loans

Access to borrowing is improving although the amount of Banks in Spain now is a handful in comparision to a few years ago so limitaions remain as choice of provider has shrunk significantly. Of those lenders left the general market conditions have improved since 2013 as has service levels, speed of underwriting and clarity by way of the new legislation on provision of a FIPRE.

The benefits of good advice

There still remains in the spanish market communication issues and a lack of tangible information. Protection for the consumer is not at the levels of say the UK neither is regulation that dictates what Banks can and cannot do. For these reasons taking experienced and professional advice when considering a Spanish Mortgage is generally a good idea rather than trying to deal directly with a Bank. 

Full article:Product availibilty and terms for mortgages in Spain 2014 update

  

Mortgage completions in Spain show signs of recovery

Spanish Mortgage completions for June 2014

Whilst Spanish mortgages still struggle to show any real increases for the first time in many months June showed an incraese in both numbers and capital lent when compared to June of 2013.

The months year on year increase whilst the first for a long time were still below those of the previuos month this year and the overall year on year figures remain down.

Spanish Banks mortgage targets

The increase of 19% in nuimbers of loans completed for dwellings when considered against June last year will however give some hope to the Banks in Spain that their targets for the year may still be met. 

Up until June not only were overall numbers down but each Month off the back of a very poor year last year the numbers were down in the corresponding months. June is the first increase indicating a possible reverse of the downward trend.

Net ouflows on mortgage books

Still of concern will be that for many months and years now the net outflow of loans each month has exceeded the level of new mortgages constituted in Spain. June continued this trend with 17,000 new loans and 23,000 cancelled loans.

Regions

The Islands continued to outperfrom most of Spain but big increases were seen in Valencia and Murcia. Of the traditional second home resorts only Andalucia seemed to buck the trend showing a small decrease in numbers of new loans in comparison to June last year.

Read the full article: Spanish mortgage completions increase in June

Mays mortgage completions in Spain continue to fall on last year

Despite having lending targets in place, reducing interest margins and launching new product Spanish Bankhes requesting loas continue to see a decline in new mortgages completed.

Spanish mortgage completions reduce year on year

May figures for mortgage completions in Spain declined on the same month of the previuos year both in terms of number of loans, capital lent and average loan size.

Whilst in the Month of May new mortgages increased from April this is a normal trend for the time of year and is no indicator that things are about to improve.

After many years of actively reducing their mortgage books 2014 has seen most Spanish Banks come back into the lending game. If they thought just opening the doors to credit again would have people flowing into the branches requesting loans, the Banks have been sorely disappointed.

Spanish Banks need to consider their current marketing strategy

With half year figures being well below expectations some of the Banks have started to aggresivley attack the market with new product and marketing campaigns.The real issues that lie beneath the surface are yet to be tackled and include the adding of compulsory products, a fear of the financially comlex high net worth clients and an inability to want to get involved in any areas of lending like re-mortgaging and focussing on purchases alone.

To ensure future earnings, volumes need to increase and the stronger Spanish Banks will need to decide quickly how in a still lack lustre home market they can safely increase credit granted by way of a mortgage.

May key facts 

May saw a decline of 3.4% in numbers of mortgages granted to homes from May last year and annual declines are now over 18%.

Mortgages in Spain completed for residential homes totalled 17,963 and mortgages cancelled in the same period of May totalled 23,405.

Read the full article : Mortgage completions in May is bad news for Spanish Banks

Latest mortgage product improvements in Spain

As per my comments published on the 1st of July surrounding mortgage completions in Spain, and an earlier article in the year the Spanish Banks have reached the half year well behind on their lending targets.

Banks lending targets for 2014

At the beginning of the year for the first time in 5 years most Spanish Banks gave their branch networks mortgage targets. After many consecutive months of net outflows the Banks looked to stabilise and grow their mortgage books through 2014.

Spanish Banks struggle to reach half year lending budgets

Whilst the doors to new mortgage lending was opened little was done by the Banks earlier in the year to encourage new applicants by way of product improvement and pricing.


This lack of understanding that just being open to lend does not mean you will do mortgages has left the Banks well behind their numbers in both capital lent and numbers of new loans particularily in the non resident mortgage market.

Other nationalities applying for a mortgage in Spain have been shocked at the high interest rates which have been well above the rates in many other countries.

With an improving cost of funds situation and better liquidity it is unrealistic to expect new mortgagees to be paying for the past mistakes the Banks have made.

Positive mortgage news for the second half of 2014

The positive news is that in an effort to encourage new mortgages at least 2 of the big 5 Spanish Banks have finally started to introduce new mortgage products, have improved their application process and most importantly are reducing margins above Euribor to realistic and sustainable levels.

The Premier product launched a couple of months ago can now be approved for purchases of € 250k or more down from a minimum of € 400k. The first year premium rate has now been dropped to the first 6 months only and has decreased from a minimum of 3% to a minimum of 2.5%. Variable margins now start at 1.5% above the 12 month Euribor.

With property prices at all time low, currency rates improving and better mortgage terms the second half of 2014 should see an increase in completed mortgages in Spain. 

Read the full article : Spanish Banks drop interest rates to encourage mortgage completions

Spanish mortgages half year news

During the next month the Spanish Banks will take stock of the level of mortgage completions within the first half of 2014.

Mortgage completion levels in Spain

Based on current data all Banks will be behind their yearly targets in both the resident and non resident sector.

Mortgage arrears as a percentage of live mortgage books has hit an all time high and repossessions continue to climb. One of the answers to these two underlying issues the Spanish Banks are experiencing is to grow the mortgage book with performing loans. Whilst each month the Banks have a net outflow of mortgages the percentage of non performing loans will grow.

Growing the mortgage book in Spain

Pressure on the Banks will increase throughout the year in the mortgage arena and further enhancements to product availibilty, a reduction in interest margins and improvements to the mortgage application process are all required in order to stabilise and regrow lending in Spain.

Issues for resolution for non resident loan applications

For non resident applicants the idea that you cannot get a financial approval in place until you have a specific property; and the fact it is not clear with many banks what terms you can expect until after an application has been made and a valuation paid for is completely alien to them; and not in keeping with the transparent and well regulated mortgage process in their own countries.

High margins above Euribor that may have been a necessity during the period of high funding costs for the Banks in Spain are also holding back applicants as often much better terms and conditions can be achieved by using a security in the country of residency rather than taking a Spanish loan.

Whilst there have been improvements during 2014 further rate enhancements, an increase in loan to values, improved financial approval processes and the dropping of compulsory and often unecssary products is required to kick start the non resident mortgage market in Spain.

Read the full article : Mortgages in Spain half yearly update

Finally and increase month on month of property prices in Spain

Data released this month by TINSA one of the most highly used valuation companies by the Banks in Spain for valuation purposes suggest the tide is trurning on price per square meter.

Property price increases from April 2014

Whilst prices in the month of May taken from a selection of formal valuations undertaken continued to show a decline for the year the May average price pre meter increased from April in all areas excpet the Islands.

The largest month on month increase was in the Coastal regions which fits with the upturn on mortgage applications in these areas from International buyers.

The Cities of Barcelona and Madrid and Valencia also saw a month on month increase suggesting in the traditional holiday resorts and areas of commerce activity the bottom of the market is very close.

A wind of change or just a blip

Since the beginning of the second quarter activity levels in terms of buyers and mortgages has increased noticeably. Valuations for mortgage purposes seem to be indicating that property can now being bought at below the level the valuation companies believe could be achieved. All these matters are helping activity and will finally follow through to an overall recovery.

Price increases are likley to be slow but steady in certain areas of Spain and a more fluid mortgage market is still required to push matters along. We are however appearing to now be at the bottom of the curve and moving in the right direction.

Read the full article : Monthly house price report for Spain

Mortgage news in Spain for April 2014

With Spanish Banks activley promoting mortgage lending in 2014 this desire to lend is yet to filter through to completed loans.

April mortgage figures

The April figures published today will make unhappy reading for the Banks in Spain, who continue the trend of large outflow of loans with more mortgages being redeemed than constitued in the Month.

Unlike last year when there was an increase in completions between the March and the April 2014 has a drop of 7.8% in number of loans granted between the two months and the accumulated yearly figures are now down by over 20%.

Are any areas showing a year on year increase

Of the regions in Spain outside those with very small numbers like Mellia only the Canary Islands is showing a year on year increase in numbers of Spanish loans completed. Month on month Balearcis and Cataluna were up in April.

Andalucia completed on the highets number of loans but remains down both month on month and year on year.

Average interest rates

Average interest rates dropped in the month reflecting a continuing pressure on margins as Banks vie with each other to grab what activity is in the market. New product has been launched in the last few weeks to capture business.

Prognosis for 2014

Enquiry levels are increasing and all the data coming out of Spain suggests property sales are increasing so through the year when this filters through to the data the numbers should improve.

Read the full article: April mortgage completions in Spain

Fixed rate mortgage offerings for Spain

This week saw the launch of some very favourable fixed rate loans in Spain.

Historically fixed rates in Spain have been offered at well above the variable rate and have not been an attractive alternative for those buying in Spain.

In complete reverse to this normal state of affairs one bank in Spain has launched a range of fixed rates that are actually below their normal first year premium rate and are only slightly above the current variable which relies heavily on the 12 month Euribor staying at is current low levels.

Given margins above Euribor being charged by Banks in Spain are now on average 3.25% to 3.5% a good long term fix to hedge against future Euribor increases, which ultimatley will happen over a period of time, looks to be sound judgement which will pay off in the long term.

What are the problems associated with fixed rates in Spain

Whilst applying for a fixed rate mortgage in Spain, from a financial stability basis is looking to be a viable option the process of application remains fraught with difficuties.

Applications for fixed rate loans in Spain have levels of uncertainty applied to them which include what rate you will finally be offered, what your redemption penalty would be if you redeem early, and the timescale it takes to resubmit an application if finally the rate being offered is not what you were expecting.

What are the best rates available

You can currently apply for
15 years @ 4.2%
20 years @ 4.45%
25 years @ 4.60%
30 years @ 4.65%

Read the full article : New fixed rate mortgage offerings in Spain

Property price news in Spain

Data issued today by the INE in Spain showed further signs that a property price recovery is on its way.

Spanish property prices past and present

Since 2007 property prices have dropped in Spain on average by 40% and in some regions by even more.

The property collapse in Spain fuelled by an oversupply of property stock, general Spanish, European and worldwide economic pressures and a lack of credit in the sytem has deterred buyers for a number of years. With Spanish Banks announcing lending targets this year and a relaxation of finance in Spain along with an improving economic environment has encouraged buyers of holiday homes and investment to start to look at Spain again.

Property price data

Four regions showed for the first time in a number of years a postive annual growth in quarter 1 of 2014 and all areas showed for the first time a decrease in the level of price reductions.

In general new houses performed better than resales but this was partly skewed by a change in the weightings used by the INE with a larger percentage of overral sales being shifted toward resales in comparision to the base year of 2007.

Spanish mortgage availibilty helps spur growth

With an increase in mortgage applications being published last month and two quarters of growth all be it small on GDP the assumption that house prices would stabilise in Spain during 2014 and show some grwoth during 2015 now seems to be a reality.

Read the full article : Quarter 1 offcial data for Spanish property prices

Spanish lending news data for March 2014

Published today was the reular monthly mortgage data for Spain.

What were the key points

For the first time in many months we finally saw a small increase in both the numbers of mortgages granted in Spain and the capital lent.

The largest increase was however in the lending to small and medium sized business as the number of Spanish loans granted for dwellings showed a much smaller percentage increase than the overall lending picture.

Why is this

Since the beginning of the year Spanish Banks have been in a price war offering lower rates to attract back business loans and get credit flowing into the economy and this now seems to be filtering through into the numbers. 
ators for total lending

Residential loans in Spain

Whilst loans to dwellings did increase in the month it was a much slower rate than the indicators for total lending. Average loan size showed a year on year increase but was static in comparision to February and numbers were up slightly year on year for the month. Overall for the year of 2014 there has been a drop of 24.2% for the first 3 months of the year in comparision to 2013 but this should change as we go through the year.

The biggest challenge for Spanish Banks

The biggest challenge for Spanish Banks is to halt the ongoing net outflow of mortgages. A continuing outflow of loans will affect long term earnings and for yet another month the amount of mortgages redeemed outstripped new loans consituted by a huge amount.

Read the full article : Mortgage news Spanish lending indicators

Are Spanish Mortgages more expensive for Foreigners

A recent article in the Telegraph about Retirees coming back to Spain to snap up cut price property also covered a number of issues surrounding Spanish Mortgages.

The suggestion was that non residents buying in Spain who take a mortgage can expect to pay up to double the rate a Spanish resident would pay.

Is this true

It is only true in the case where the resident is buying their main home. For a second home or for investment a Spanish resident, as in most countries, can expect pay much higher rates when contracting a loan.

For Foreign buyers who are not working in Spain and in the tax system the property in Spain is treated not as a main residence so rates are higher. This is the case even if the purchase is to be the main home. To achieve lower rates the buyer must first put themselves into the tax system and be a full Spanish resident.

For non nationals buying in the UK, where mortgages are available, which is few and far between, rates are higher to reflect the extra deemed risk. The same is true for Spanish Banks who lend freely but see non residents buying a holiday home as a higher risk than a resident who is buying a home to live in.

Are non resident mortgage rates double resident rates

With the current improvements we have seen over the last few weeks the average rate residents will pay is not half of what a foreigner will pay. Yes the headlines talk of 1.25% above Euribor but to achieve this rate the Spanish applicant will have to have a low loan to value, a private pension with the Bank along with payment protection, life cover and buildings and contents insurance, and have their nomina paid into the account each month.

Best rates for a non resident currently is 2% above Euribor with life cover, contents insurance and a Bank account as compulsory.

Should I contract a Spanish Mortgage or borrow at home

There is no one right solution for everybody. For some people buying in Spain releasing funds secured against a UK home will be the best solution and for others a Spanish Mortgage may provide a better route. Taking professional and experienced advice from someone who understands both markets and can outline the pors and cons of each is probably the best first step in making the right desicion for your circumstances. 

Read the full article : Foreigners pay higher rates

 

Mortgage News Spain Barclays to leave Spain

Amongst a number of cuts announced to day Barclays group have confirmed they will be leaving Spain.

Why are they withdrawing

Like most Spanish Banks Barclays have suffered in the last few years from higher provisioning requirements, falling incomes and increasing defaults.

As a known UK brand Barclays have one of the largest non resident mortgage books in Spain. Failure during the peak years to effectively manage risk have compounded the problems the Spanish arm has.

What were the risk assessment failures

Barclays were one of the few Banks to offer 80% loan to value during the peak years and linked this solely to valuation in a rising price market. This meant often they were actually lending 100% or more. The inexperienced members of the risk teams and the Branches also understood little about how to assess or check the credibilty of UK style paperowrk when assessing an application through the mortgage process.

This obvious lack of experience or knowledge made them a prime target for fraudulent applications and they were hit hard during the period of high volumes.

What other factors have had an impact

Barclays swung from offering the lowest possible rates and with lax criterias to closing the doors completley for a period of time to new applications, to opening them again but with very tight criteria. Aimed at attracting high net worth individuals their most recent offering failed to recognise that the type of client they wanted had complex financial situations and that to expect every client to fit tick boxes was never going to work.

Read the full article: Barclays withdraw from Spain

Spanish Banks quarterly profit reports

Last week saw all the Spanish banks report on their performance for the first quarter of 2014.

Apart from BBVA  the second largest Bank in Spain by capitalisation all other Banks announced a general improvement to both overall profitibilty and a reduction in the level of Spanish Mortgages in default as a percentage of the book.


Bankinter whilst reporting slightly lower profits than market predictions had one of the best increases in profits. Bankinter has a much lower default percentage than most of the other big players at 5.2% when the average across all lenders is above 13%.

Bankia the Government owned banking group also showed a quarter on quarter and a year on year improvement. Bankia more than any other Bank in Spain has benefited from passing its bad assets to SAREB who was set up to help Banks remove their vast property portfolios from their own balance sheets.

Are the improvements having an effect on Spanish Mortgages

In the resident market there is a steady but sure uptrun in the mortgage market. The improvements include a price war for attracting commercial lending along with a reduction in rates for residential loans particularily at the lower loan to value level.

For non Residents there has been little movement on terms and conditions but we are starting to see this slwoly chnage or Banks at least recognise change is needed.

New product for loans on purchases above 400k has been launched by Sabadell in the last couple of months and other Banks are willing to move from standard pricing to secure quality clients.

Who is buying in Spain with credit still tight

Clients buying in Spain and requiring legal services are rising in numbers and many of these are still cash buyers. It is becoming however more obvious that for the property market to recover fully mortgages in Spain must start to flow more easily and product adjustments happen. The Banks now have lending targets so are keeping a watchful eye on each other and once one moves significantly the others will follow.

Read full article:Spanish banks report lower mortgage defaults

Spanish mortgage trends for February 2014

Released today are the mortgage figures for Spanish Lending within the month of February.

Despite some positive news reported this week relating to the overall situation of Spanish Banks this has yet to feed through to an increase in new loans constituted.

The data which is taken from land registry is always a little behind the curve as it can take up to three months from completion for Land registry to report, but looking at year on year figures the trend is still downwards.

Year on year mortgage figures

Year on year the number of Spanish loans have dropped by 32.7% in comparision to last year and 33.7% down on capital lent.

Interest rates

Average interest rates at 4.11% is slightly down on Januarys average rate and is the lowest average rate for Spanish Loans since March 2013.

44.5% of all mortgage products granted related to residential loans showing a higher split of all loans relating to other Urban properties which suggest an upturn in commercial lending.

Regional variations

The Balearics continues to be the region where the decrease in mortgage activity is at its lowest on a year on year basis which ties in with this regions better  than average house sale performance

Read the full article : February mortgage news for Spain

Changes to UK mortgage market bring it closer to Mortgages in Spain

Announced today by the regulatory body covering UK lending were new rules that must be implemented when a Bank assesses an applicant for mortgage purposes.

What are the changes to how mortgage applications will be approved

The two key changes are a move away from gross income multipliers to looking at affordibilty based on actual incomes and outgoings and the introduction of a benchmark interest rate of 7% against which all applicants must be assessed to allow for future rate increases.

How do applications for mortgages in Spain currently work

For years Spanish Banks have worked to affordibilty ratios based on net incomes as shown on personal tax returns versus outgoings on debt and loan repayments. In general terms each Bank looks to see that outgoings do not exceed on average 35% of incomes. The documents required by a Spanish Bank will reflect the need to check expenditure in these areas.

Whereas the Spanish Banks only take into account expenditure on debts, it is reported that UK lenders will also be required to take into account all outgoings which could include things like Gym membership, Pension contributions and telecommunication contracts.

Why the changes to mortgage assessment

Whilst it could be argued that working to affordibilty ratios has not helped the default situation for Spanish Banks this is against a background of severe and unusual economical turmoil and the situation could of been worse had affordibilty ratios not been the key underwriting tool. The changes in the UK are to ensure that mortgages are granted without stretching the applicants resources to breaking point should rates increase or the mortgagees situation change.

Will the changes dampen the housing market in UK

It is possible the new restrictions could depress demand. A tighter mortgage market with less flexibilty on criteria has certainly had an impact on overall lending in Spain.  For UK residents however a mortgage in Spain remains normally attached to the purchase of second home and not a main residence, the impact of the new rules will be more profound where linked to what is a primary residence.

Read the full article: Changes to UK mortgage market bring risk assessment in line with Spain

Outlook for mortgages in Spain

Early data published by the INE shows little sign of improvements to the level of mortgages being granted in Spain.

Is there any positive movement for Spanish Loans 

Whilst upfront activity of buyers going through the mortgage application process has been higher in the first quarter indications are from the Spanish Banks that targets for mortgage completions in the first quarter will fall below expectations.

January data out from the INE in Spain seems to support this with January figures showing a decrease in loans constituted below those of the previuos year.

February figures may be a bit more encouraging as January year on year figures will still reflect the fact in late 2012 many buyers raced to complete to beat the end of the tax breaks. The figures shown in the data are from Land Registry not Notaries so there is a lead lag on timescales.

What were the key indicators for January

Overall numbers of Spanish mortgages were down year on year and the numbers of mortgages completed in January in comparision to the December showed a lower increase than the same data from 2012/ 2013. 

Average loan size was up by 1.3% and average interest rates rose slightly as well.

Fitch Ratings Agency annual mortgage report

In a seperate report Fitch ratings agency threw caution on the Spanish Mortgage market and the overall situation for both property prices and arrears throughout 2014. Fitch anticipate arrears peaking in 2014 before starting to fall and alos predict they expect property prices which have fallen by an average of 36% to continue to drop to an average of 40% from the peak before starting to recover in 2015.

In the last quarter of 2013 Spanish banks sold property from their stock at more than 70% below the original valuation levels. This compares with the average discount of 48% since 2009. The indications are Banks are now heavily discounting property in order to clear their books. In order to dispose of large portfolios in one go it is necessary for the Banks to heavily discount prices for the Investment Funds that have popped up over the last few months.

Read full article : Mortgage market indexes in Spain

New Spanish Mortgage product for Nothern Europeans

In the last few weeks Banks in Spain have been opening up for credit.

What are the changes

Whilst this is across the board the Banks are very focussed at present on attracting for mortgages the Northern Europeans.

Falling into this pot are all the Scandanavian countries, Swiss nationals along with the Dutch and those residing in Belgium.

Why are the Spanish Banks keen to attract these clients

There are a number of reasons why the Banks are focussing on these populations. Firstly there are higher numbers of them purchasing in Spain due to low purchase prices and good exchange rates. Secondly the Spanish Banks experience of clients from these countries is that they are less likley than others to default, and thirdly the general veiw is their home economies are stronger than the UK and Southern European countries.

The key incentives the Banks have put in place to gain new business are a reduction in mortgage rates and higher loan to values. For the Scandinavians and Swiss they will benefit from both ends, an increase to 70% loan to value and a reduction in rates. For Dutch and Belgians it is an increase in loan to values from 60% to 70%.

What facilties were available before

Prior to the new mortgage services and products being available only NYKredit a Dansih Bank offered special terms for clients from Sweden, Norway and Denmark. Whilst their product remians attractive they only cover certain parts of Spain and have minimum loan sizes.

The changes are to be welcomed as part of the overall recovery in Spain but in order for things to start flowing it needs to be recognized that margins must come down across the board for all nationalties.

Read the full article : Mortgage news for Scandanavians, Swiss and German Buyers in Spain

Official figures from the INE on Spanish Mortgages

Levels of new loans granted

the level of mortgages granted in Spain in December 2013 as expected were down for the year on a month by month basis and a total year.

Number of new loans  secured against dwellings fell to 12,329 in December down some 30.1% from the same month of the previuos year.

Whilst siginificantly down on last year December 2012 was a better month for completed new loans skewed by buyers buying in Spain to beat the removal of tax breaks that were withdrawn at the end of 2012.

Average loan sizes also dropped in December to € 101.494

Regional variations

Coastal areas held up better in 2013 than the City areas which is possibly a reflection of who is buying in Spain. Non resident mortgage applications toward the back end of 2013 were higher than the start of year.

In the more resident areas like Madrid new loans garnted fell by more than 50% in the month of December.

Average Interest rates and term

The average interest rate for new loans constituted in December was 4.32% which was around 3.78% above the 12 month Euribor.

The average term over which new loans were granted in December was 20 years.

2013 Full year figures

Spanish Mortgage numbers decreased by 27.8% for the whole year. Given each year for the last 5 years the number of new loans granted have decreased significantly hitting overall decreases each year of 20% or more the levelof lending in Spain is now significantly lower than at their peak and well below historic norms.

The level of mortgages being closed within the month topped the 20,000 level in December meaning we had another consecutive month of a net outflow of mortgage balances from the Spanish Banks books. Not split out is how many of these redeemed mortgages related to Banks taking over the property and how closed due to the loan being paid off in full.

2014 what to expect

2014 should show an improvement in overall levels of mortgages granted. For the first time in many years the Banks have lending targets and we are already seeing a small but not insignificant price war happening where the client wants lower loan to values and has low debt to income ratios.

Read the full article: Loans in Spain official figures for December

Reductions in Spanish mortgage rates

What is happening in the Spanish Mortgage market

In an effort to increase in 2014 the level of Spanish mortgage loans, Spanish Banks  have started to launch new mortgage product and decrease overall rates.

The first area to see a change was in the reduction of the first year premium rates from being above the prevailing variable to offering first year rates that are below the current variables.

Moving on from this trend we are now seeing Banks reduce overall mortgage terms and decrease the margins above Euribor for subsequent years.

Spanish loan pricing 

For the last few years we have seen a regular trend of upward margins above Euribor across the board. Back before the crisis in Spain began margins were in the region of 1.25% for non resdients and as low as 0.50% above for residents of Spain. During the crisis these margins moved to as high as 6% above Euribor for non residents and 4% above for residents.

Gradually over the last few weeks we have seen the pricing drop for both international clients and residents of Spain. Some of the best rates out in the market are now as low as 1.95% above Euribor for fiscal residents and 2% above Euribor for international applicants.

Other Banks who have not reduced standard pricing are now however open to negotiation for quality applications.

Compulsory products

When buying in Spain those clients who require a mortgage will still find the rates offered come with linked products. These linked products will always include life cover which is often added as a lump sum at completion to ensure the cover is not cancelled at a later date.

How long due to new European supervision creeping in Spanish Banks will be able to maintain this practice remains to be seen.

Mortgage applicants should always check the FIPER which is issued at offer to see what linked products they are going to be required to take.

read the full article :http://www.imsmortgages.com/blog/reductions-in-interest-rates-latest-news-for-spanish-loans/

Spanish Lending news

News for lending in Spain relating to November 2013 was published yesterday.

Who publishes the Spanish mortgage news

Each month the national statistic office in Spain publishes data taken from land registry as to the number and types of mortgages completed.

In November 2013 there was yet another month of reduced mortgage lending against residential property. This trend has continued for a number of years but was slightly skewed by the high number of completions in the previous year as buyers rushed to Notary to complete on purchases before tax breaks were withdrawn.

Are there positives to be taken from the data

It is dificult to say whether Novembers data is just a continuation of the previous trends or a blip caused by unusual activity from the same time the previous year.

The first few months of 2014 will dictate whether the corner has turned on mortgage lending in Spain or if we still have a way to go.

What is the current attitude of the Spanish Banks

Whilst not as yet showing in the figures published there is now a desire within the Banking industry to start lending again.

Whilst the past few years have seen Spanish Banks reduce their mortgage books by design, it would appear the tide has turned.

In order to maintain their current customer bases and all the linked products that a mortgage brings Spanish Banks have this year re-introdcued lending targets and appear to have some flexibilty on pricing for the right clients and an improved mortgage service.

Read the full article :News for Spanish Mortgage lending

WiII lending in Spain improve in 2014

What happened in 2013

2013 was one of the worst years for mortgages in Spain since the crisis began.

A number of lenders withdrew from the market and pricing and criterias tightened. All Banks in Spain continued to reduce their mortgage books and no lender was activley pursuing new mortgage clients.

Have things changed for 2014

Toward the back end of 2013 and into early January it became clear there was a wind of change.
In the last couppe of weeks we have seen lenders who had withdrawn from the non resident mortgage market come back to the market with new product and those who remained in the market starting to flex their portfolio.

What is the most marked change in lenders attitude

The most telling sign that things will improve in the Spanish Mortgage market is that this year all Branches and Branch staff have been given mortgage targets.

In both 2012 and 2013 due to the lack of focus on lending, mortgage targets were non existent.  The fact mortgage targets are now back in place is the best indication yet that the Spanish Banks are back in the market.

How quickly will this change impact on availibilty

The impact of having mortgage targets is immediate but other changes like reductions in interest rates, more flexible criteria and possibly increased loan to values will be a slow process. It is unlikely that we will see major improvements to overall terms in the immediate future but a level of negotiation will become increasingly possible.

Read the full article: Is there a wind of change for mortgages in Spain

Whats new in the lending market Spain for 2014

2013 for Spanish Banks and Spanish lending became one of the worst years ever.

 

What happened

Lenders continued to withdraw from aggresivley lending and all Banks in Spain shrunk their mortgage books throughout the year.

Rates climbed as margins above Euribor increased despite the drops in the ECB base rate and subsequent drops in the 12 month Euribor.

Criterias for applicants remained tight and underwriting continued to be very volatile.

Are there any changes expected for 2014

A few of the Banks who had either withdrawn from Spanish lending particularily in the non resident market have come back into the market with mortgage product and there are some signs that Banks will have lending budgets for this year.

What is not envisaged is a fundamental change to rates, adding of compulsory products or an easing of loan to values and criterias.

Has liquidity eased for the Spanish Banks

Most Spanish Banks during 2013 consolidated their position to meet new guidlines as specified by the Bank of Spain. Bolstering of balance sheets was the name of the game in 2013 and this will continue in 2014.

Raising of capital either by way of sale of assets, rights issues or by third party investment has helped improve the overall situation. In particular South American Banks have seen buying into Spanish Banks as a good long term investmnet for the future.

Read full article : Whats new for Spanish mortgage lending in 2014