2017 Mortgage news in Spain

Overview of activity

Activity across all areas of mortgage lending in Spain have increased during 2017. Growth has not been consistent during the year with a few blips along the way but in general average loan sizes are up, capital lent looks to have recovered and numbers of new loans will also have increase from 2016.

All Spanish lenders put in place at the beginning of the year very challenging targets and whilst these will not have been met never the less business levels have moved forward well during the last 12 months.

Buyers increase

Investors keen to make the most of low pieces per square meter have flocked to the major buying areas and Spanish nationals off the back of slow but sustained economic recovery are making high ticket purchases again like the buying of or upgrading of their home.

Interest rates have continued to fall during the year and fixed rates as a percentage of all new lending has continued to rise.

Fixed rate activity grows

Fixed rate interest levels fixed for the full term have encouraged people to consider this product type despite traditionally most mortgagees electing for variable rate products.

Best buys have fallen during the year with even non resident mortgage applications achieving rates from 2.1% for 10 years.

Underwriting

Risk assessment remains diligent but there is now some flexibility and underwriters come under pressure from retail sales to take a slightly more pragmatic approach to new files.

Whilst criterias must be adhered to more complex applications are now being underwritten which has not been the case for many years.

It is hoped that 2018 will continue the upward trend and that we will see more months in 2018 where new lending business outstrips cancellations and the Spanish Banks lending books start to grow again.

Read the full article:- 2017 review of Spanish loan market

Recovery for loans in Spain

September Mortgages in Spain

After a rather volatile month August Mortgages in Spain showed good growth again in September.

Average loan sizes grew considerably both month on month and year on year. The level of capital lent increased again month on month and year on year and for the first time in many years there was significant mortgage book growth for the Spanish Banks within the month.

over 8,000 new loans were constituted than loans redeemed.

Rates rise slightly

Interest rates spiked slightly increasing as an average for both variable rate products and fixed rates. This may move down again in the coming months as at least one major lender decreased fixed rates in November.

Overall the average interest rate was 2.83%.

Home loans

The amount of new mortgage applications being granted for the purchase of a home moved up from August levels where it dropped to below 60%. The percentage of loans given for buying a home went back up to normal levels of circa 63%.

Catalanu after a poor performance in August saw mortgage activity increase again but remains behind in increases to the other key regions of Madrid, Andalusia and Valencia.

The Canary Islands due to lower levels of new Spanish loans in the early months of the year is one of a handful of regions who is down annually. The Balearics on the other hand as a percentage are the highest in terms of annual increases but against limited numbers.

Read the full article:- Residential loan activity in Spain

Mortgage levels down in Cataluna

Impact of Cataluna Independence

Whilst pre the referendum held in Cataluna August Spanish mortgage data showed the region falling behind the upturn seen in other regions of Spain.

Mortgages in Spain rose month on month above July figures except for Cataluna who saw a fall.

Whilst the region remains up year on year and August 2017 figures were still above those of august 2016 there was a marked difference in the performance when compared to the rest of Spain.

Interest rates fall

Interest rates as an average continued to fall for both variable rate products and fixed rates. Fixed rates are down significantly on last year and the percentage of Spanish loan applications opting for a fixed rate has increased by over 50% in the last 12 months.

The data includes changes to existing contracts and the Spanish Banks have been moving clients with floor rates to fixed rates so this has also had an impact.

Numbers of new loans

Numbers of new loans increased both year on year and month on month but the average loan size whilst above last years dropped against July to the point where slightly less capital was lent in the month.

Whilst not yet a trend August saw another month where outflows were exceeded by new business added which is good news for the Spanish Banks.

Read the full article:- Lending up nationally Cataluna sees a drop

American loan applicants in Spain

American buyers

American buyers in Spain can expect favourable terms and conditions from Spanish Banks in comparison to other non EU citizens.

This is because the processes for documenting taxed incomes, recording of debt performance in the US is very clear and transparent and robust.

Other countries where this is not the case struggle to obtain the same terms and conditions offered to those residing in Europe.

Product availability

Maximum loan to value in Spain will be 70%. This is restricted because the property is a second home rather than primary residence.

If the applicant intends to live and pay income taxes in Spain after a sustained and prolonged period of time in the Spanish system a further 10% may be able to be borrowed.

Product types are not sophisticated as they are in America and no interest only is granted.

Loans are repayment either variable trackers of fixed rates foxed for the full term.

Application process

It is possible before coming to Spain to view property to get in place a fiscal approval. This requires a fully documented application is made to the lender and is underwritten by the risk teams subject to valuation of a property.

The securitization process in Spain is very different to the US as are the legal obligations and there is a lack of flexibility after completion in terms of changing product or lender so it is always best to take independent and expert advice from a mortgage broker before committing yourself.

Read the full article :- Mortgages in Spain for Americans

Spanish Banks improved lending levels

July data for mortgage lending in Spain

July figures over the month of June showed a decrease as was the same month over month for 2016.

Despite this the lending levels increased significantly against the same month of the previous year.

Activity on completions for Mortgages in Spain which was non existent in the month August historically in recent years has been much better due to legal firms not shutting the doors in the month.

This means that buyers are not rushing to complete before July ends and has given a smoother completion cycle across the year.

Spanish Banks

Spanish lenders are keen to do business at present and are some way behind their target levels fro the year.

Mid season sales offering reduced rates for completions before the end of September this year have been on of the rather bizarre ways the Banks have been fighting back.

Interest rates continue to fall with average rates reducing each month for both fixed rates and variable rate product types.

Fixed rates

Fixed rates after dropping off as a percentage of all completions rose agin to over 38% of all new loans in July. From the less than 5% of all new loans a couple of years ago the rise of the fixed rates has been quite spectacular.

What impact offering full term and long term fixed rates will have on margins in the future we do not know but for borrowers they are undoubtably a good deal.

This may continue for a few months as rates stay stable and Banks look to see off their competition.

After a couple of months of the Spanish Banks adding more new loans than those redeemed in July there was a net outflow.

Read the full article :- Spanish mortgage activity for the month of July

High net worth lending in Spain

New mortgage product for Spain

In an effort to fill a gap in the Spanish lending market a well known Swiss Private Bank has just launched a new product.

The loan allows for both purchases and re-financing.

No cash out is possible as any funds released from an existing property must be placed on deposit with the lender.

The lender offers a wide range of investment facilities set up to meet the needs of Private Banking clients.

Fixed rates and interest only

5 to 10 years fixed rates are available which can be taken interest only but with a minimum capital repayment of 5% per year.

For equity release the maximum initial term for the Mortgage in Spain , which can be re-negotiated is 5 years.

Borrowing up to 100% of the price or value of the property is possible by using a mixture of security of the Spanish property and against cash deposits.

Private banking requirements 

To access the product the applicant must become a Private Banking client and minimum deposit for this to happen is € 2.5m either on deposit or in managed funds.

The product will be ideal for the financially complex clients who do not want to buy a property in Spain with cash but find it hard to meet the normal documentation requirements of borrowing with the Spanish Banks.

Only ownership entities which are outside of Spain are applicable to lending so no-one who is ate payer in Spain or owns the property via a Spanish based company would qualify.

Read the full article:- Private Banking Lending facilities

June Spanish loan statistics

Junes loan data

June data released yesterday shows that the lending market in Spain continues to improve in 2017.

Whilst there are some blips for certain regions overall the the level of mortgage activity is up across the board.

Bucking the 5 year trend

Junes performance over the good month of May showed another month on month increase bucking the normal 5 year trend of Junes levels slowing against Mays.

Net inflows

The number of loans constituted for the purpose of buying a home in Spain was greater by 176 than the number of home loans cancelled within the month.

This is the only month bar 3 others were this has been the case since the banking crisis started some 8 years ago.

Interest rates

Fixed rates which were charging ahead as the mortgage applicants favoured choice has stalled slightly in the last couple of months with the share of new mortgages in Spain being contracted on this basis falling slightly.

With no sign of base rates rising at the 12 month Euribor at all time low borrowers may be being lulled into a false sense of security and taking variable rates because they are currently lower than the fixed.

Read the full article:- Mortgage activity in Spain

Lending in Spain increases in May

Mays lending data

Lending in Spain saw a marked increase in May after the very low levels seen in April.

The increases were across the board in all areas including numbers of, average loan size and capital lent.

Whilst it is normal for May to be an improvement on the April the month over month increase was the highest percentage for over 5 years.

Interest rates

After a couple of months of rates edging up despite the Euribor dropping May saw average interest rates drop to 2.9% this was a big reduction from the previous month in percentage terms.

Fixed rates as a mortgage product type seem have stabilised at around 35% of all new loan contracts well up on previous years but stalling slightly in the last couple of months. Whether this is clients choosing not to take fixed rates because of lower margins being offered and the current low level of the Euribor or if the Banks are choosing to move away a little from long term but low fixed rate offerings is not as yet clear.

Spanish Banks

All leaders are currently hungry for new business and are way off lending target levels.

Competition is increasing again as we passed the half way point in the year.

On the positive side more loans were constituted in Spain inMay than cancelled this being for only the second month in nearly 10 years.

Read the full article Loan levels in Spain recover in May

Spanish Banks and compulsory products

Spanish Bank margins

Spanish Banks in effort to maintain profitable margins have increasingly become insistent that borrowers and those making a mortgage application contract with the lender a number of compulsory products.

Life cover linked to a loan in Spain

The product most resented by applicants is life cover as many already have enough cover from other providers or via work and the new cover is not necessary.

Often the cost of life cover can turn what is a competitive interest rate into a very costly loan particularly where the borrower is older and or the loan size is large.

To prevent applicants cancelling life cover at a later date most Banks now write into the mortgage deed a rate increase if this happens or take all the life cover premiums upfront by adding it to the mortgage amount granted. This means the borrower is not only paying for life cover they may not require but will be paying interest on it too.

Danger for the Banks

Despite losing a number of recent court cases surrounding unfair practices the Spanish Banks are ignoring this ticking time bomb which may affect profitability in later years if the Courts decide they could not insist the product was taken and are required to compensate borrowers.

Read the full article:- Is life cover the next Spanish Banks ticking time bomb

April loans in Spain reduce

April loan statistics

Following on from March when loan levels were below the same month of last year April has continued this trend.

On top of being down on the same month of the previous year by over 20% April also saw a reduction in numbers of Mortgages in Spain , capital lent, and average loan size against March 2017.

Regional variations

All regions in Spain saw a downturn of loan completions against last year and the previous month.
Most regions remain up for the year due to very high levels of completions in January and February but it is concerning we have seen two months of stagnation.

Home loan credit

The percentage of all credit flowing from the lenders into the market for the purpose of buying a home dropped 54.6%. Normally this is above 60% of all credit. This indicates that buyers are holding off in Spain due to a number if factors including Brexit and the concerns over the fragile economy growth in Spain.

Spanish Banks loan books reduce again

After a few months of either net loan book gains April and a negative outflow although not at the same level as we have seen in previous years.

Read the full article:- Mortgages in Spain monthly statistics

March loan activity in Spain

Mortgages in Spain rise in March

The level of new capital lent for the purpose of buying a home rose in March.

The average loan size of Mortgages in Spain dropped slightly over February but increased numbers of new home loan credits meant overall the amount of capital grew.

Coastal areas increase

Coastal areas and major Cities like Madrid in general are showing good increases in mortgages both for the Month and across the year. The Canary Islands and Murcia are exceptions to this both are struggling to match last years activity levels.

Spanish Banks news

BBVA who have a UK Division announced they will remove themselves from any new lending in both the UK and Spain. Regulated by the UK for the activity undertaken there this may be a response to their concerns over the impact of Brexit on financial service activity. It may equally be that the division struggled to meet the volumes necessary to make the offerings worthwhile.

Other Spanish Banks have this month started to offer IMS clients special deals for a limited period in an effort to pull back some market share.

Banco Popular has come under severe scrutiny in May and is actively looking for a buyer due to the pressure on its balance sheet due to toxic debts and its large property portfolio.

Net mortgage book outflows

Other news includes a reverse of the past couple of months where Banks in Spain have seen their loan books grow slightly. May was a month of net outflows with more loans cancelling than new loans being constituted.

Read the full article:- March mortgage data in Spain

Mortgages in Spain numbers drop in February

Spanish loans

In February the number of Mortgages in Spain registered at land registry and new loans signed in the month dropped in comparison to January.

Capital lent increased however due to a higher average loan size.

Whilst normal for Februarys home loans to decrease against January the drop in numbers was the largest percentage drop for the last 5 years.

House loans

The amount of new credit in the market that related to the purchase of a house also dropped in February.

Fixed rate versus variable rates

Fixed rate loans continued to grow, taking a share of 38% of all new loans, the fixed rate interest level was less than the previous year but overall rates increased marginally.

Brexit causes uncertainty

Coastal areas saw the biggest drop month on month for new loans perhaps under pressure from uncertainty of non resident buyers who mainly come from the UK.

Regionally across the first two months of 2017 against 2016 most regions are still showing an annual increase.

Mortgage book losses decrease

Spanish Banks saw a net loss to their mortgage books for the month after January where there was a small gain but the loss has slowed considerably.

Read the full article :- Numbers of Spanish loans drop in February

2017 January Spanish lending grows

The first month of the new year saw positive growth in Spain for new lending contracted.

Loan levels increase

Across the board all regions increased year on year and month on month in terms of numbers of loans and capital lent.

Spanish Banks will be happy to see that for only the second time in many years the amount of newMortgages in Spain taken was greater than the amount of loans cancelled.

Fixed rate products

Fixed rates continued to grow as the choice of borrowers and now makes up well over 30% of all Mortgages in Spain completed within the month.

A wide range of fixed rates are now available from most lenders with fixed rate terms ranging from 5 years to 30 years. Due to a lack of re-mortgage facilities in Spain and the high costs of taking a loan to a new lender, fixed rates are a very viable option for borrowers.

Spanish Banks have very keen pricing on their fixed rates products and whilst still above the variable rate options due to the low Euribor, they appear to provide a very good medium to long term option.

Best performer the Balearics

Regionally all regions performed above December of 2016 and January 2016. the Balearics had the highest percentage increases and the Canaries the lowest.

Read the full article :- Positive start for 2017 for loans in Spain

2016 mortgage market overview

Spanish lending performance in December.

December saw a mixed month of mortgages in Spain with most regions showing numbers below those of November but all increasing year on year.

Average loan sizes rose in December so despite the drop in numbers the actual capital lent did not fall so heavily.

Full year results

Across the whole year, now the full 12 month completions data is available, Spanish lending saw it best year since 2012.

Total numbers of new loans and capital lent grew in all regions over 2015 although the pace of growth was a little behind 2015 to 2014 levels.

Fixed rate growth

2016 saw the mix of variable rate product types drop and fixed rate product types grow dramatically. All Banks in Spain launched fixed rate products and the share of the total new lending market grew from around 5% to over 30% in 12 months.

Net outflows continued to be a problem with over 28,000 more loans being redeemed than new loans being constituted. This has now been the case for every year since the banking crisis.

Brexit impact

Brexit hit non resident loan levels for a couple of months but UK applications have increased for the first two months of 2017. Whether the triggering of Article 50 pushes this backwards will be clear over the next few weeks.

Read the full article:- 2016 mortgage market in Spain

Lending in Spain increases

Spanish mortgage lending

Lending in Spain increased in November over both the previous year and the previous month.

The average loan size dropped month on month but higher volumes up over 32% meant capital lent was higher.

Lending activity

Activity for the year in most regions has increased in 2016 over 2015 and this should remain the case as the year end reporting comes in next month.

Interest rates

Fixed rates have been the main story of the year and the percentage of loans that completed with this mortgage product type hit 31.8% of all lending in November.

Average interest rates rose but very slightly and have been stable all year.

Challenges for the Spanish lenders

Spanish Banks will pleased with the increase in  volume although it will fall behind their target levels. The biggest pressure for the lenders has been that numbers of loans cancelling within year have continued to outstrip new loans constituted.

Read the full article:- Loans in Spain increase year on year

2017 loan outlook Spain

What happened in 2016

2016 was a year of little change for Spanish mortgage applicants abut major market changes for the Banks.

Spanish Banks had a number of challenges thrown at them during the last 12 months.

Market conditions affecting lending

These included a number of factors. Firstly the Banks lost their case on floor rates meaning they had to remove them from new and existing contracts and compensate borrowers who had paid more interest than if the floor rate had not been in place.

Secondly Brexit hit hard both the non resident buying market and the cost of buying in Spain as sterling was hit hard.

For a short period this currency fluctuation brought in new business as cash buyers sought to gain a loan but long term the drop in sterling will affect the buying market in total.

No cohesive Government in Spain after the July elections held back the housing market as Spanish buyers held off on high ticket items such as a home until the political landscape and taxation levels became more stable.

December court case lost

In December the Banks lost another court case on the normal practice of passing on the registration costs of both purchase and mortgage deeds to the borrower. The implications of this in the current low margin lending market have yet to unfold.

Cost of funds started to increase and fixed rate product types which saw very low interest rates halfway through the year started to climb and will continue to do so through the first few months of 2017.

Will risk assessment be relaxed

The only areas the Banks still have control over are risk criterias and flexibility of product types. If they are to meet the loan targets they want in 2017 the Banks are going to have to look closely at what in this challenging market allows them to increase profitability without losing volume or market share.

Read the full article :- Spanish lending news and views for 2017

October loans in Spain

Levels of lending in Spain during October

Levels of borrowing in Spain fell from the previous month of September but remained up on the same month of 2015.

This data is in line with normal market trends where only once in the last 5 years have Spanish Banks increased their completions in October over September.

Average loan amounts

Average house prices nationally continue to fall and this is reflected in the average loan size. Regionally the fall in house price and loan size is not across the board with certain hotspots seeing increases.

October was a bad month for levels of loan registered within most of the traditional holiday home regions this may be due to UK buyers holding off somewhat until the impact of Brexit is known.

Product types and interest rates

Mortgages in Spain completed with a slightly lower percentage being contracted on a fixed rate product type basis and interest rates rose very slightly.

Best buys in terms of fixed rates are not now as competitive as they were as cost of funds have risen in the market.

Loan cancellations

Loan cancellations which were below new borrowings in September increased again in October giving a negative outflow for Spanish Lenders.

Based on completions our prediction is that lending levels will be buoyant for the last two months of the year.

Read the full article:- October Mortgage completions in Spain