Lending in Spain increases in December

Mortgage levels

December showed an increase in all areas of lending in Spain.

Numbers of new loans for the buying of a home were up by 28.9% against the same month of corresponding year, capital lent increased by 33.8% and average loans sizes rose to € 104.950 an increase of 3.8%.

For the full year when considering data aginst 2013 new loans were up marginally with 202.954 registered against 199.700 registered in 2013. The numbers whilst showing an improvement were still down against the yea of 2012 and half of that completed in 2012.

Interest rate and loan types

Average interest rates fell again to 3.5% partly due to the Euribor decreasing again and partly due to Spanish Banks dropping margins being charged.

Over 93% of all loans were taken on a variable rate basis with less than 7% of all mortgage applications being processed and granted on a fixed rate.

Net outflows

Despite the positive news of a continuing month on month increase in credit and a positive end to 2014 net outflows continues to be the the biggest issue for the banks in Spain. In total nearly 80,000 more loans were cancelled than new loans constituted.

Spanish Banks will need to work hard in 2015 on their best buy products and overall credit flexibilty if they are to halt the shrinking of their loan books and the impact finally on the bottom line of lost business.

Read the full article: Loan levels in Spain increase again

Banks in Spain go to war

Spanish Banks

The Banks in Spain since 2014 have increased their desire for new business.

Instead of devising a porfolio of products, based on profit required and tailored to applicants requirements, the lenders have kept in place the old fashioned and pricey product structures and just told Branch staff not to lose any new loans based on pricing.

This has led to a significant upturn in Banks being played off against each other.

Is this good for the consumer

Whilst it would appear on the face of it to be good for the clients going through a mortgage application process it is in fact only good for those who know it can be done, and if they happen to walk into a branch behind on targets.

For the majority of direct clients,who will not be aware they could negotiate, or who have not applied to more than one Bank what they may finally achieve will be a very uncompetative home loan.

Is there a better way forward

With the level of risk assessment tools the Banks have and historic information the lenders should and could be capable of putting together a more sophisticated range of mortgage products. They should be able to offer as standard, low cost flexible loans to the best risk clients,and competative and flexible loans to all borrowers.

This should be done at Head Office level so Banks keep control of their margins and the quality of the business. Just selling more of the same but at lower pricing to clients they think they may lose, with no reference to the overall risk and profibilty of that loan, is not how lending should be in the 21st century. Lack of mortgage product regulation means Banks can be less transparent than for instance their UK counterparts but this is still not the right way forward.

Read the full article : Dynamics of the spanish lending market