Spanish lending news for February

Loan news for Spain

Data out today confirms the housing market is moving forward but also shows the level of credit in the market place overall is dropping.

Loan capital granted for homes was up 37.1% from February of last year and total credit for urban property was down 0.6% in the month, and total lending down 17.2%. It is clear that lending to business and commerce remains slugish in Spain. Given the Spanish Banks desire to lend it is unlikely this is because of the lenders but more likely to be lack of demand.

Positive data for home loans

On the positive side for dwellings lending was up not only year on year but for the first time in 5 years also showed an increase in Fenruary over Januarys figures. Traditionally over the last 5 years less money is lent in February than January but this year this was up by 1.8%.   

Year on year Capital lent increased by 37.1% for home loans and numbers of loans increased by 29.2%.

Month on month capital was up 5.4% and the average loan size increased by 3.5%.

Mortgage product types and rates

Interest rate averages continued to drop hitting 3.5% in February. This decrease is due to a drop in Euribor and margins being charged.

Variable rates continue to be the favoured product for lenders and mortgagees with over 90% completing on this basis.

Regional ups and downs 

Andalucia as a region was up 42.9% for home loans based on last year indicating a high level of buying activity. The Canary Islands showed a massive decrease of 60.8% as to whether this is just a blip will unfold as the months progress.

Whilst for home loans most of the news is good the Banks still suffered another month of net outflows as 21,298 new mortgages were added to their books and 26,649 mortgages were cancelled.

Readty the full article : Lending news in Spain is a mixed bag for February

Constant changes to lending criteria in Spain

What is happening in the Spanish Banking system

After years of providing lending in Spain and countless historic mistakes one would hope that the Spanish Banks had learnt a few lessons and were striving to improve.

The last few weeks would suggest most of them are in disarray when it comes to implementing and deciding on criteria.

It maybe that the dual pressures of the Risk management teams versus the commercial teams are pulling the process apart but most Banks need to get a grip and start thinking about their long term approach to mortgages or they wil risk putting the market back to the doldrums.

How is Spain different

In most countries whilst lenders retain as they should the right assess their current criteria and product and to respond to market conditions as they see fit, genrally speaking there is at least some level of stability and a clear stratergy on lending fed down from the top.

In Spain the reverse sems to be true. Spanish Banks appear to have no clear medium or long term stratergy preffering to chnage things at a whim often without any consideration to what this might do to their service levels or with any real logic applied.

Changes to criteria and their impacts

In the last few weeks we have seen one lender make 4 new statements in quick succession to criteria which have affected mortgage applications. When announcing them they have done so on the basis that this has been the case for sometime and have affected applications where had this been the case they could have said so at initial submission, not some weeks down the line.

One lender has carte blanche removed themselves from providing loans in certain areas they see as blackspots but have been daft enough to approve loans fiscally whilst saying they will only complete if the client buys elsewhere. Given in all these instances a property had to already be found to allow for underwriting the approval is about as useful as a chocolate teapot.

With no understanding of their market which they state they want to attract the same lender will now only sign loans where an applicant attends Notary in person. Given they are looking to attract non residents not based in Spain and it is perfectly legal to sign with a POA this rule has no logic to it. To gain a POA a Notary who is the upkeeper of all transactions in Spain must check the person giving POA is who they say they are. Is this lender therefore questioning the whole premise of the legal system in Spain. Who knows.

Getting to grips with professional service levels 

It is not unknown and has been the case for many years for Spanish Banks to lack basic customer service and be client focussed but taking weeks to reject applications on the basis they could never have been done in the first place should have been irradicated from the application process by now.

For those working in the industry whilst clients themselves may think headline rate is the only consideration, experts in the field know this is only part of the story. The best rate in world is of no use at all if the mortgage cannot be brought to completion.

Read the full article: The problem with Spanish Banks 

Mortgage market in Spain hots up

Increasing share of the market

In an effort to capture a greater share of the non resident buyers market Banks in Spain have started to look at a number of new initatives.

Caixa Bank have rebranded a number of their existing Branches in the Coastal areas aand major Cities specifically to attract overseas clients.

Looking for a 25% share of the mortgage market for foreigners the new Bank called Hola Bank will give some underwriting and mandate desicions back to the regions and Branches to allow for a quicker and more flexible service.

Other Banks responses

Other Banks like Sabadell who pushed up margins at the begining of 2015 have rapidly backtracked as it became clear they had done so at just the time opther banks were lowering theirs.

Bankinter who moved to 60% loan to value after the crisis are now looking for ceratin applications to be underwritten at 70%.This will be cases where the borrower is of good financial standing, has low debt to income ratios and the loan size is a large one.

Other Banks have told their branch staff to not lose applications because of pricing even if they have currently maintained higher standard terms.

Interest rates fall

Rates are now averaging 3% and on the odd occassion it might be possible to achieve as low as 1.5% above Euribor. At 1.5% the Banks bearly make money so achieving 2% above Euribor is more realistic and can be considered for most applicants a good deal in todays market.

The requirement for borrowers to take out life cover a bone of contention with many mortgagees is still in place with most Banks. Lenders like UCI and Targo Bank are however now offering loans without putting pressure on those Banks who still insist on insurances being taken.

More changes will come

2015 will doubtless see more by way of changes and all Banks are now keen to attract non resident loans having moved away from them in the last few years.

With fundamental changes made to the way Banks assess an application and by lending against valuation or purchase price whichever is the lower, the quality of new loans is higher and the liklehood of defaults lower.

Read the full article: The changing face of non resident lending in Spain 

Another positive month for Spanish Banks

Spanish Banks increased lending in Spain again during the month of January.

Both capital lent and numbers of new mortgages grew by over 30% when looking at the same month of the previous year.

Average loan size edged up slightly for the purpose of buying a dwelling.

Lending was up against the figures for December but the rise was not as high as a percentage when compared to the last two years. This percentage however was set against much lower volume levles for 2014 and 2013.

Rates

The amount of mortgages in Spain completing on a fixed rate remained small in comparision to those completing on a variable rate. This may change as the year progresses due to more availibilty of fixed rate products at keener rates and will lower redemption penalties.

As applicants during the coming months start to worry that rates have hit rock bottom and that the Euribor will certainly start climbing again a fixed rtae may look more interesting.

Average interest rates were over 20% below the levels of last year due to margins relaxing and the 12 month Euribor continuing to move downwards.

Regions

Only one region in Spain showed a decrease in lending volumes for the month and the Canaries nearly doubled its volume aaginst January last year and Decembers figures.

All regions best known for their International buyer population showed increases although whilst by absolute numbers Andalucia completed on the highest level of loans the percenatge increase remained below the average mean.

Reduction in loan books

 

Net outflows was the only fly in the ointment as the Banks failed to reverse the trend of more mortgages being redeemed than new loans constituted. This net outflow remains the key challenge for the Banks during 2015. Whilst keen to reduce their loan books after the crash in 2007, 8 years of net outflows is now putting pressure on earnings.

Competition is starting to hot up to capture a larger share of the buying market and non resident borrowers are no longer a nasty word. New best buys are being launched regularily.

Read the full article : January completions increase again in Spain

 

Lending in Spain increases in December

Mortgage levels

December showed an increase in all areas of lending in Spain.

Numbers of new loans for the buying of a home were up by 28.9% against the same month of corresponding year, capital lent increased by 33.8% and average loans sizes rose to € 104.950 an increase of 3.8%.

For the full year when considering data aginst 2013 new loans were up marginally with 202.954 registered against 199.700 registered in 2013. The numbers whilst showing an improvement were still down against the yea of 2012 and half of that completed in 2012.

Interest rate and loan types

Average interest rates fell again to 3.5% partly due to the Euribor decreasing again and partly due to Spanish Banks dropping margins being charged.

Over 93% of all loans were taken on a variable rate basis with less than 7% of all mortgage applications being processed and granted on a fixed rate.

Net outflows

Despite the positive news of a continuing month on month increase in credit and a positive end to 2014 net outflows continues to be the the biggest issue for the banks in Spain. In total nearly 80,000 more loans were cancelled than new loans constituted.

Spanish Banks will need to work hard in 2015 on their best buy products and overall credit flexibilty if they are to halt the shrinking of their loan books and the impact finally on the bottom line of lost business.

Read the full article: Loan levels in Spain increase again

Banks in Spain go to war

Spanish Banks

The Banks in Spain since 2014 have increased their desire for new business.

Instead of devising a porfolio of products, based on profit required and tailored to applicants requirements, the lenders have kept in place the old fashioned and pricey product structures and just told Branch staff not to lose any new loans based on pricing.

This has led to a significant upturn in Banks being played off against each other.

Is this good for the consumer

Whilst it would appear on the face of it to be good for the clients going through a mortgage application process it is in fact only good for those who know it can be done, and if they happen to walk into a branch behind on targets.

For the majority of direct clients,who will not be aware they could negotiate, or who have not applied to more than one Bank what they may finally achieve will be a very uncompetative home loan.

Is there a better way forward

With the level of risk assessment tools the Banks have and historic information the lenders should and could be capable of putting together a more sophisticated range of mortgage products. They should be able to offer as standard, low cost flexible loans to the best risk clients,and competative and flexible loans to all borrowers.

This should be done at Head Office level so Banks keep control of their margins and the quality of the business. Just selling more of the same but at lower pricing to clients they think they may lose, with no reference to the overall risk and profibilty of that loan, is not how lending should be in the 21st century. Lack of mortgage product regulation means Banks can be less transparent than for instance their UK counterparts but this is still not the right way forward.

Read the full article : Dynamics of the spanish lending market

new home loans completed in November

New mortgages increase for 6 months in a row.

The number of new loans registered at land Registry in Spain showed another increase in lending for the purchase of homes when compared to the year of 2013.

Both numbers of loans and capital lent has been slowly but steadily increasing in the latter part of 2014.

Average loan sizes

In line with the fact house prices continue to ease downwards average loan size fell again in the month of November but this did not prevent a healthy increase in the overall amount of money lent and new mortgage applications made.

Interest rates

Average interest rates continued to drop being some 18% lower than this time last year partly due to the 12 month Euribor decreasing and partly due to Banks shaving margins throughout 2014 to try and attract new business.

The increase in new loans is also having a positive affect on the percentage of bad loans as a more healthly balance of performing loans to bad debt occurs.

Variable rates continued to make up the bulk of the products types with only 7.4% of all home loans completing on a fixed rate basis.

Bucking the positive trend

In a strange move given the more positive signs of 2014 Sabadell Bank increased margins on Monday the 26th of January. This unexpected backward move, supposedly put in place to make loans more profitable will hit the numbers of completions the Bank can make. From market leader Sabadell now sits well back in the pack when considering competitors and are against the trend with other Banks continuing to reveiw interest rate offerings downwards.

Mortgage redemptions

The news is not all good as canceled or redeemed mortgages continued to outstrip by quite someway new loans on books. The shrinking of loan books in Spain has now been happening for over 5 years and at present despite some positive signs this trend looks to continue for a while yet.

Read the full article:- New lending in Spain increases in November