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