Spanish lending during 2016

The last 12 Months

2016 has seen a number of changes in the Spanish mortgage market. Outside pressures like Brexit have affected the buying and mortgage application market with UK buyers being the largest population of non residents in Spain.

FX rate fluctuations

Foreign exchange rate fluctuations have been vast during the year rising as high as 1.42 and dropping within weeks to 1.10. For those buyers outside the Euro this has a massive affect on the price being paid and has pushed some cash buyers towards taking lending in Spain until the pound recovers.

Fixed rates

The biggest change in the loan arena in Spain is the rise of fixed rates. From almost a total variable rate market fixed rates now make up over 20% of all loan completions each month.

Spanish Banks now hold a range of full term fixed products ranging from 5 years to 30 years.

Risk

The Bank of Spain has sought during the year to keep lending under control and the Risk teams within the Spanish Banks have not thrown caution to the wind. The outcome is another year of net losses to the mortgage book and a year of missed targets.

Compulsory products the surge of Spanish lending remains a key issue for mortgage applicants but very competitive fixed rates have helped overcome this.

Read the full article :- 2016 Spanish loan overview

Spain shows healthy rise in home loans

September Data

September Spanish home loan levels rise nicely during the month of September.

The monthly increases were off the back of an unusually high level of new loans registered in the month of August. Year on year and annually month on month, after Julys set back the last three months have seen new credit move forward.

Average loan size helps capital lent increase

Average loan sizes rose in September to their second highest level in last 12 months and this along with higher numbers pushed total Mortgages in Spain for the purpose of buying a home to over the 3.000mk.

Interest rates drop slightly

Average interest rates dropped slightly in the month to 3.17% and the level of loans contracted on a fixed rate basis rose a little.

Other lending sees a decrease within the month

Signings for home loans also saw a similar increase in the month although lending for other purposes dropped back. This may improve now business have a clearer view on the political landscape.

Construction loans for new builds fell back in the month and remain very low in terms of numbers of.

The Spanish Banks for only the second time in over 5 years actually added to their mortgage books as new lending levels was higher than cancellations.

Read the full article:- News for home loans in Spain

Regulation changes in Andalucia

Regional loan changes

The region of Andalusia brought into force in October new legislation relating to information documents that must be given to a new applicants for a mortgage in Spain, and a calling off period.

After many years of Banks in Spain hiding clauses like floor rates it is good to see new rules being enforced but in typical Spanish style the new rules do little other than add to the time it will take to complete on a loan and the level of paperwork that will need to be signed.

All the new documents could have been rolled into two rather than the five we now have.

Up to five days cooling off

A cooling off period is not a problem except that technically of a completion must be delayed all the documents will need signing again rather than those presented for the signing that did not happen being able to be used for the new date.

Mortgage completions in August

August completions both signings at Notary and registered loans at Land registry rose in August from July. It would seem that a number of July completions slipped into August as it is unusual for August mortgage levels to be higher than Julys.

Year on year August also saw an increase on the same month of the previous year.

Interest rates remained stable for the month at 3.26% and fixed rate product types continued to grow as a percentage of all new lending.

Spanish banks continue to see a reduction in their lending books as redemptions outstrip new loans for yet another month.

Read the full article:-Spanish loans monthly update

Sterling crashes

Pound versus the Euro

The reduction in the value of the pound in the last few weeks and the complete crash of last week will affect those planning to buy a property in Spain.

For those already committed to a purchase who have signed a Private Purchase Contract the fall will affect them immediately. A fall of fx rates from 1.21% to the 1.11% seen can affect the cost by € 10k on every 100k.

If there is time within the agreed contract a buyer could consider taking a Mortgage in Spain to help mitigate this extra costs and to manage the loss over a period in time and or hedge against the pound recovering somewhat in the next few months.

Mortgage in Spain

A loan in Spain will cost about 4% of what is borrowed to set up but with a good range of fixed rates available that fix the rate for the full term this might be a better option than losing out now.

If the pound recovers in the short to medium term many fixed rates have reasonable early redemption penalties that allow the capital to be paid back when it suits the borrower.

For those potential buyers who are not yet committed but wish to continue looking at Spain for a second home getting in place a fiscal approval for lending before searching for property will give them peace of mind on budget and overall costs leaving only the deposit monies and costs open to exchange fluctuations.

Longer term affects

In the current environment Spanish Banks are being cautious on debt to income ratios ad there may come a time when they assess this against a pound that is the same as the Euro in terms of value.

It will remain to be seen how much affect this drop in sterling will have on the overall market in Spain given UK buyers are the most prolific after Spanish residents.


Read the full article:- Sterling falls affect buyers in Spain

July Spanish lending declines

Lending levels reduce in July

Data from both the INE and Notary Offices showed a decline in the number of Mortgages in Spain completed and or registered in July along with a drop in capital lent.

This decline is the first year on year drop in the level of new credit flowing into the Spanish housing market for many months.

Numbers of houses sold also declined as might be expected during the month.

Whats affecting lending

Affected possibly by both the political uncertainty in Spain and the outcome of the Brexit vote it is unclear of the slowdown is a grand or a blip.

Spanish Banks, who are falling behind in their target levels for mortgage loans,Internal market conditions will improve  and who are still experiencing a net outflow of loan capital each month may be hoping it is a blip. Criteria for UK based non residents has however hardened in recent months due to concerns over the ongoing exchange rate situation of sterling.

Political uncertainty

Internal market conditions will improve when a government can be formed. This may be assisted by the standing down of Pedro Sanchez in the last few days. Overall credit into the market was down in July and hit even harder than the housing market was credit for new constructions and business loans.

The next few months

Fixed rate product types continued in July to increase their share of the market and overall interest rates were down from the same time last year.

September and October are normally good months for both sales and Mortgages in Spain but present enquiries whilst remaining at reasonable levels are hard currently to turn into tangible business.

Read the full article:-Spanish loans decrease in July

News for Spanish loans

Spanish loans increase again in June

June showed a further increase in lending over both May of this year and year on year.

Whilst numbers of loans was were down on May levels the average loan size meant that capital lent increased. Year on year the number of loans granted are up 19% accumulated and capital lent up 21.9%.

Mortgages in Spain for the purchase of a home increased in percentage of total new credits in the month of June making up over 60% of all new contracts.

Fixed rates

In a continuing theme for 2016 fixed rate products increased in the share of the total new credits contracted. From a base a couple of years ago of 6% to 7% of all loans, fixed rates now form over 23% of all new lending. This is a fundamental shift for Spanish Banks who up until recently did not often offer a fixed rate at all. Previously all lending was made on a variable rate basis.

Regional performance

Over 2016 the only region to exceed new mortgages made over loans cancelled and redeemed is the Balearics. All other regions still show a net outflow. This is not good news for the Spanish Banks as the contracting mortgage book is and will continue to put pressure on interest earnings and profit from attached products.

Interest rates

Average interest rates increased very slightly in June which may be a reflection of the level of higher but more stable fixed rate solutions now favoured by both Banks and mortgage applicants alike.

Read the full article :- Lending data for June

Changing lenders in Spain

Re-mortages in Spain

Spanish Banks have in general withdrawn from offering re-mortgages in Spain. The reason for the withdrawal started with the need to reduce mortgage books and has continued due to concerns  of taking over another banks loans and the risk of default.

High costs

The costs of moving a loan also prevent a very active re-mortgage market.  

Mortgage deed tax which is around 1.8% of borrowings the largest cost but even if this can be avoided other costs including, bank fees, valuation fees and notary and land registry fees will total around 2% of borrowings.

Gibraltar based Banks

Some homeowners in Spain took out loans with lenders including RBS ( Nat West) Gibraltar , Jyske bank and Nordea  and completed with full term interest only mortgages for up to 15 years. At the end of those 15 years the loan had to be  repaid in full. The lack of a re-mortgage market is hitting these borrowers hard.

On a case by case basis a handful of lenders will look at taking over a loan that has to be repaid and it is one of the few circumstances where this can be considered.

Terms and conditions

Any new loan will be repayment and the new lender will insist compulsory products are taken including bank account, life cover and house insurance. Overall rates will not be as favourable as those the applicant who used Gib based banks had before.

Read the full article:-Current situation for re-mortgages in Spain

Spanish Banks assess risk of Brexit

Risk managers are cautious

Post the Brexit vote no lenders in Spain have changed their criteria for risk assessment but all risk teams have expressed some concerns.

None of the Spanish Banks want to alienate UK loan applicants as they form the largest part of their non resident market but some of the financial uncertainties have to be considered.

Currency exchange rates

Currency exchange rates are by far the biggest concern. Already we have seen a large drop in Sterling with no indication in site as to where this might level out. When assessing affordability of a Mortgage in Spain how much finally per month the loan will cost has an impact on the debt to income ratios.

If sterling continues to drop the cost of the loan each month will rise and may make it difficult for marginal applicants to support the payments going forward.

Other considerations

Other matters like the stability of the UK economy and what impact this may have on business owners and employed individuals is also of some concern to the underwriters but will not and does not have such an immediate and obvious affect as the currency fluctuations.

Commercial teams

The commercial teams of the Banks in Spain may find themselves in coming months at odds with the risk teams as one side looks to minimise possible risk and the other looks to build lending to meet the yearly budgets for non resident mortgages in Spain.

Read the full article:- Mortgages in Spain post Brexit news

Expat loans in Spain

Expat mortgages in Spain

A number of recent changes due to the credit directive in the EU and the outcome of Brexit has thrown into question the opportunity for lending facilities in Spain.

Many expats living and working outside the EU are wondering what if any borrowing they can take when buying in Spain.

The reality is that nothing has changed for the Spanish Banks at this moment in time and there are no indications that anything will.

Whilst a number of UK and Irish Banks withdrew expat loans earlier this year the facilities for a mortgage in Spain have not changed immaterial of what currency the applicant earns their income in.

Terms and conditions

Expats from countries outside the EU can expect to gain slightly lower loan to values than those based in the EU but broadly rates are the same.

For some Banks in Spain the ability to add life cover to a loan for someone outside the EU is not possible so from this point of view the applicant may actually find they have a benefit.

Document requirements 

In areas like the UAE which has no personal tax system, the level of bank statements required to prove incomes may be higher than for other applicants, covering a full 12 months. Other means to confirm debt situation in the absence of credit files will also be required. Document requirements will be different for each application.

Spain can continue to be a good half way house for expats who have no desire to retire or semi retire back to northern Europe. Climate, quality of life and cost of living will continue to be attractive.

Read the full article:-Spanish loans for expats

Home loans in Spain increase again

Lending in Spain during May rose again.

2016 loan levels in Spain for the purchase of homes has increased each month throughout the year.

Numbers of and capital lent have seen increases in excess of 20% both inter monthly and annually. Average loan sizes surprisingly fell in May although maintained a small increase over same month of last year.

Notary offices report house price fall

According to the Notary offices the average price per m2 of property fell away in May down by some 5.1%. Whilst mortgages in Spain are rising the expected growth in house prices apart from a few regions remains a hope rather than a reality.

Fixed rates surge ahead

Fixed rate product types continue their surge. Over 19% of all new loans secured in May were on a fixed rate basis. This compares with less than 10% a few months ago. Variable rate products continue to be linked to the 12 month Euribor as the index of choice and with the Euribor in negative territory many lenders are considering writing a base of 0% into the contracts to protect themselves from negative interest rates.

Spanish Banks

Defaults fell in the last quarter so whilst the Banks in Spain continue to see net outflows each month the level of loans in arrears as a percentage of their books is falling all be it slowly.

Mortgage applicants are beginning to work out that with some lenders you can avoid compulsory products after year 1 if you elect to take a fixed rate mortgage product type. Some Banks are avoiding cancellation of these by adding life cover as a lump sum at completion.

Competition for the resident market remains fierce but we have seen little to no movement on rates or conditions for the non resident market since the start of the year.

Read the full article :-Spanish lending up again in May

Impact of Brexit on Spanish Loans

What does Brexit mean for buyers in Spain

Many mortgage applicants who are either considering taking a loan in Spain or are currently applying may be wondering what impact the Brexit vote will have.

At present none of the Spanish Banks have specifically changed their standard terms and conditions and the chances that officially they will do that in the immediate future is remote.

The UK market is important one for the lenders in Spain, forming the bulk of their non resident lending and at a time when they are looking to increase lending anything that puts borrowers off applying before impact can be considered properly is unlikely.

The commercial department within the Banks will want to keep the status quo for as long as possible and it is also the case that most lenders in Spain like the rest of the world had a though that a remain vote would be the outcome.

 View of risk teams

The risks teams within the Spanish Banks may however take a slightly different view. Their job is to protect the Bank against the potential outcome on defaults of the leave vote. The risk teams will be more cautious when granting loans due to the many unknown quantities on the UK economy, in terms of jobs, legislation changes and the affect on sterling.

We can expect to see risk teams turn down the more border -line applications and or restrict more heavily the loan to value, loan size and in some cases pricing.

 What might the outcome be

This means that whilst we may not see immediate wholesale changes, the risk teams may start to look at applications in the same way as they currently do for non EU nationals applying. Flexibility on underwriting and loan to values are more heavily scrutinized for those outside of the EU than those in it, for a number of reasons.

Due to the drop in sterling it may make sense for the short to medium term for potential buyers to take a Spanish Mortgage even if they have the cash to minimize the impact on total cost of the pound buying less euros. This will have to be balanced against the longer term objectives of the applicant and their view of what the future will hold for the UK economy, sterling and their own individual prospects.

Read the full article :- Will Brexit affect Mortgages in Spain

April loans and house sales in Spain

Growth continues in Spain

Growth in terms of both house sales and mortgages in Spain moved forward in April but in some areas growth slowed.

Overall new build sales continued to lag behind that of resales and the level of increase in house sales which had grown since June 2015 to November 2015 fell back in the first quarter of 2016.

The stalling of the market may have been due to uncertainty surrounding the countries leadership after the first general election in November and may be buoyed going forward by the second election which has just taken place.

Spanish Banks

Spanish Banks are certainly keen to lend so financing is not the issue. One interesting outcome of the data issued in June was that the percentage of house sales bought by way of a mortgage in Spain only reached 45% in April. This compares to levels topping 70% in a normal month.

Lenders in Spain  will hope this is a one off and despite this drop in those using finance to buy for the month loans in Spain  increased.

Mortgage lending was up both in terms of capital lent and numbers of new loans. The increase over march levels was lower than perhaps is normal but year on year and annually accumulated the market remains on upward trend.

Interest rates

Fixed rate product types continue to form a larger percentage of the total market rising to 14% of all home loans taken as they are deemed to be the best buys. The average interest rates is settling around 3.20% for the year so far.

The Euribor itself rose slightly in May but dropped back again for June but the stability in rate will be partly down to a preference for both mortgagees and Banks to consider a fixed rate contract.

Canary Islands

Regionally the only area which appears to be struggling across the year to date is The Canary Islands. A natural haven for expat buyers this may have been affected by external matters outside of what is happening in Spain.

Read the full article :- Property and loan market in Spain

Growth slows for Mortgages in Spain

March lending figures down on February

Whilst year on year for the first three months of 2016 lending levels of Mortgages in Spain are up on 2015 in March the rate of increase slowed and across both numbers of and capital lent when assessing the data against February.

The trend of lower loan levels in March is normal but with the housing market appearing to be recovering and Spanish Banks being eager to lend it is slightly surprising we are not seeing month on month increases.

Fixed rates

For 2016 the momentum for fixed rates being chosen as the mortgage product type by applicants is continuing. Each month the share of new loans being completed on a fixed rate basis increases. Whilst from very low levels the increases are significant and show a marked change in the market. All Spanish Banks are now pushing and providing access to fixed rates.

 Lack of clarity around early redemption penalties for some lenders will hold back this trend but in general the fixed rate market looks to be a good medium to long term bet.

Average Interest rates

Average interest rates fell in March due partly to the move to fixed rates and a drop in Euribor over the last couple of months. Whilst still in negative territory for May there was a very small increase the first increase in many months.

Mortgage books

For yet another month the amount of loans being cancelled outstripped new loans being constituted. After many years of actively reducing their loan exposure Spanish Banks will remain concerned about future earnings until this trend can be reversed. Currently there appears to be no end in site with only one month in the last 6 years showing a net gain. Pressure on earnings form this area and the environment of low interest rates means the lenders have to up their game in cost efficeincy and further mergers may be seen this year.

Read the full article:- Loans in Spain for March fall over February

Housing and Banking data in Spain

General statistical reports Spain

Last week and this week saw a number of reports published in Spain in relation to house sales, transfer of property rights and the Spanish Banks.

Overall the transfer of property from one individual to another saw a dip in March both year on year and month on month. When the statistics are broken down the sale of actual homes whilst down on Februarys figures never the less are holding up year on year and annually accumulated.

Drops in urban commercial sales and lower levels of swaps and Inheritance affected the overall figures as did a lower level of transfers falling into other titles which includes Bank repossessions of security half for a mortgage in Spain.

Number of house sales

A total of 31,925 homes were sold in March of such only 6,200 were new builds with the rest being sales of second hand homes. This split is a far cry from the boom years when new build sales outstripped resales.

Sales of homes to foreign buyers both those who are living in Spain and those specifically buying a second or holiday home saw an increase through 2015 of 12.9% according to the council of Notaries.

Foreign buyers are made up of all nationalities but the largest group by quite some way is the British. Foreign buyers who lived in Spain during 2015 bought at a lower price per meter square than in 2014 but those who did not live in Spain paid 2.9% more per meter square than in 2014. This may be due to a number of factors, where they buy, type of property they buy and how they sourced the purchase.

Easing of lending to the non resident market during 2015 and an increase in the number of mortgage product types available assisted the market.

Spanish Banks

Spanish Banks also came under pressure last week as the first round of quarterly results for the major lenders showed a drop in profitability due to margin pressures. With interest rates at an all time low it is difficult to the Banks to remain competitive and still make money.

Further consolidation is expected during 2016 with more mergers possibly on the cards and a further streamlining of the branch networks.

Read the full article:- A mixed bag of Spanish data

Lending news for the Spanish market

Spanish banks

Spanish banks have been hit by a court judgement in the last couple of months that has not only outlawed floor rates but has stated that compensation should be paid for at least those mortgages in Spain completed since 2013.

The judgement will hit earnings and in an effort to avoid future problems many of the banks in Spain are looking at growth strategies outside Spain.

A few of the lenders are proactively approaching mortgagees with floor rates and offering good long term fixes for the benefit of signing away any rights to future action against them.

House sales in February

According to both the notary offices and land registry house sales continued to grow in February. Average price per square meter fell by a small amount but overall sale of homes climbed year on year and against January 2016.

Whether this trend will continue due to the political uncertainty etc will remain to be seen. Certainly the Spanish banks relaxed criteria for lending in the quarter according to the findings of the Bank of Spain. The relaxation of criteria was to help keep mortgage growth moving forward as demand whilst up from previous levels is still seen as weak.

Mortgages in Spain

Lending levels grew both for those registered at land registry and signings within the month of February. Average interest rates rose slightly reflecting the shift from variable rate products to slightly more expensive but more stable long term fixes. Best buys reflect this.

The percentage of loans registered as fixed rate product type was the highest in history in February and should continue to grow.

Net Outflows

More loans were redeemed in the month than new loans constituted so the challenge remains in Spain the same. How to grow the loan books.

Read the full article:- Mortgage in Spain data improves

January mortgage news is a mixed bag

Mortgage levels for January

Both the INE and the Notary offices published this month the New Year first month data for mortgages in Spain.

Whilst in terms of both numbers of loans and capital lent both reporting bodies were showing a year on year increase for loans registered at land registry in the month the increase over Decembers results were the lowest for a few years.

Wider data

The wider data which is published by the INE and includes matters such as average interest rates and mortgage product types indicated a continuing trend toward fixed rate loans. Whilst the numbers are still very small the last 12 months have seen a shift from around 5% of loans completing on this basis to now just over 10%.

Average loan sizes came under some pressure in the month although overall they continue each month to grow. This coincided with a reported 2% increase in average price per meter square being paid by purchasers owning property in Spain.

Madrid leads the way

Regionally the strongest areas in the month of January were Madrid and Valencia. Some of the coastal and Island regions who had very strong performance through 2015 fell back slightly.
Whether this is a one month blip or a trend toward less mortgage applications from foreign buyers due to uncertainty surrounding the Political arena in Spain will remain to be seen.

Net loan outflows

For Spanish Banks one area of good news was that the gap between the amount of loans they lost due to cancellations or redemptions and the amount of new loans they granted narrowed to less than. 1,000.

Read the full article : - Spanish mortgage data for beginning of year is mixed news

Mortgage application process Spain

When is a mortgage offer not an offer

Whilst the application process for a Mortgage in Spain closely resembles that of other countries the process of pre-approval can be confusing and lacks robustness.

Apart from one lender no Banks in Spain have sophisticated scoring systems that allow them to pre-approve loan by checking key parameters.

Scoring systems

Sabadell Bank who do have a scoring system which allows for quick responses on what it is likely they can offer do not however use this scoring system in the way in which a UK lender might and an applicant used to pre-approvals from other countries should proceed with caution when they are told they are approved and on what basis.

In Spain only fully packaged applications that have been passed to and reviewed by the Risk Teams at either regional or national level are deemed to be fiscally approved. Any other information however official it may appear given at branch level is just an illustration of what could be posible and is not in any way shape or form an approval to lending.

Valuation first

Many Banks in Spain will not pass to their underwriting teams a documented application for fiscal approval until a valuation is paid for and the result is back to be added to the file. This can mean a valuation fee must be paid before an applicant even knows if they are personally approved and meet bank criteria.

Avoid the pitfalls

Most Banks, if you insist on it or are using an experienced broker will provide, without valuation a fully underwritten approval to lend but just because documents have been submitted do not assume it has been seen by Risk. Often branch staff will just review the file and state that they see no problems.

Language barriers and a miss-understandings over how far in the process the application is can cause confusion.

Read the full article :- Applying for a Mortgage in Spain

Loan reporting for Spain 2015 final figures

February mortgage reports

Data published in February from the various reporting bodies in Spain show that both mortgages in Spain and house sales have made a slow but steady recovery during 2015.

The INE who reports on registered Spanish loans and registered transfers of property titles rather than signings showed a higher year on year increase than the Notary offices. This would seem to indicate that signings from the back end of 2014, registered in early 2015, were higher than for the same months in 2015.

2015 results

Overall during the year mortgage capital lent grew by a higher percentage than numbers of new loans granted. The higher increase was due to the average loan size increasing during 2015. Cataluna for example saw growth of over 60% when relating it to capital lent but only a 37% increase in numbers of loans. Madrid on the other hand was the only region who saw a higher level of growth on numbers of loans to capital lent. 

In general coastal areas and those most attractive to foreign buyers saw the best level of growth both in terms of financial facilities and house sales.

Rates and product types

The average rate by which Spanish Mortgages were granted increased for the first time in many months during December despite the Euribor declining  slightly. This may be due to the ongoing trend toward fixed rate product types. Fixed rate best buys may provide a higher immediate rate but will provide good value for money and stability in the medium to longer term.

Net loan outflows

Mortgage in Spain redemptions were 55,000 higher than new loans constituted so net outflows remain the main challenge for Spanish Banks going forward.

Read the full article:- Home loan results for December and 2015 in Spain

Mortgages in Spain news for 2016

Mortgage news.

With 2015 seeing improvements to Mortgage in Spain facilities the Spanish Banks continue to look to push forward in 2016.

Key changes include lenders who have been out of the non resident market for many years coming back in with a bang, and more flexible approach to pricing and risk assessment.

Fixed rate options

After years of promoting variable rates only, many lenders in Spain are now offering and will continue to offer in 2016 fixed rate product. With rates as low as 2.75% for a full 20 years applicants should consider fixed rate options rather than variable if they intend to hold the loan in the medium to long term.

Loan to values

More Spanish lenders have or are considering adding themselves to the list of lenders that offer non fiscal residents of Spain up to 70%. In 2015 most limited their offering to 60% but during 2016 it is most likely 70% will become standard for a number of lenders.

Spanish Banks

Spanish Banks have in general doubled targets for 2016 and remain very positive about the purchase and borrowing market despite some of the outside pressures in Spain and political uncertainty. It will be the aim of the Banks to finally reverse years of net lending outflows each month during 2016.

Overview

Clients going through an application process in Spain during 2016 should experience a more want to do attitude from the risk departments as the power shifts from underwriting to the commercial teams. Whilst things will not return to the rather lax assessment of criteria from the boom days a more pragmatic approach to mortgage applications will be the name of the game.

Read the full article:- What does 2016 hold for Spanish Mortgages  

House sales and loans move forward in Spain

Monthly reporting figures

Data out from the two reporting bodies the INE or statistical office and the Notaries in Spain show that mortgage lending and the home sales grew in November.

The pace by which both grew did slow slightly when considering seasonal adjustments and previous months within 2015.

Notary Offices

According to the Notary offices the number of house sales reached 34,918 in November and 25,681 new loan agreements were signed. 

Average price per meter squared declined slightly at € 1.219 after two months of small increases.

Average loan amounts reached € 144.223 up 5.5% on the same month of the previous year.

INE

Data from the INE which looks at contracts actually registered with land registry showed a similar pattern.

Sales of homes was 13.7% up on the previous year with 28,733 sales recorded.

Mortgage lending increased on the same month of last year but dropped back against October of 2015.

Fixed rate mortgage types continued to show a higher share of the overall loan market.

Overall both number of loans and capital lent has steadily increased during 2015 against a low level of transactions in the last few years. 

Resales and new builds

Both sales and mortgages have seen the increases they have against a growing second hand market. Resales are outstripping new build sales by quite someway. New build sales have steadily fallen for the last 19 months.

Read the full article :- Loan levels and house sales in Spain for November

Variable rate or fixed rate which is best

Fixed rates versus variable rates

Currently in Spain for the first time Spanish Banks are promoting fixed rate mortgage products.

Previously fixed rates have been difficult to obtain and have not been competitive so the choice of what product type to elect for has been an easy one when making an application.

The choice now has widened with a range of good fixed rates being offered starting at 2.45% for a 10 year rate and 2.75% for 20 years. In general the fixed rate products are for the full term it is not usual as it is in the UK to have a fixed/ variable mixed.

Up sides of fixed rate products are stability of payment during the term of the loan and a hedge against rate increases in the future.

Current market conditions

Whilst the variable rate remains below by an average of 1% that of the fixed rates this is only because the 12 month Euribor is at a historic low. For January the 12 month Euribor is 0.059% but it has been as high as 5.75% and on average across the last 14 years it will have sat at 2.5%. 

With margins above Euribor for variable rate Spanish loans being in the region of 2% to 2.5% it would not take long in an increasing rate environment for the variable to meet and then exceed the overall rates provided by the better fixes. 

Choosing the right product type

Fixed rate products can change between application to offer there is no way during the application process currently to secure the rate you are applying for. Fixed rates also have higher early redemption penalties than their variable counterparts giving less flexibility for those mortgage holders who know they will want to make overpayments or reduce the loan term.

Whilst much will depend finally on personal choice and personal circumstances as to whether a fixed rate is the right route at least there is now a viable alternative in Spain.

Read the full article :- What mortgage product type is the best in Spain