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