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