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