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