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