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