Spanish mortgage completions July 2013

Last week the INE in Spain published the monthly Spanish Mortgage completions for July of this year.

The report from the INE in Spain outlines how many loans were registered in July versus mortgages cancelled and redeemed along with information on the regional numbers and split of type of lending.

Key data

Spanish Mortgages for urbanized homes made up  48.4% of all capital lent, with country properties only making up 8.9% of the capital lent and land loans 13.6% of capital lent.

91.2% of all Spanish loans completed in the month of July were on a variable rate basis. The Euribor remained the favorite index for variable rate loans. Fixed rate mortgages were used in only 8% of all transactions. Average interest rates for July were 4.40% for Spanish mortgages granted on homes rather than commercial which was slightly lower than the rates of July 2012.

July figures showed the number of mortgages completed in Spain dropped by 42% as of the same corresponding month in 2012. The average value of each granted mortgage increased from June 2013 but the number of new residential mortgages dropped 2% from the month of June and the current year on year decrease now stands at 26.1% less than the previous year. The amount of total capital lent in 2013 to date has fallen by 29.3% from the same time in 2012.

Redemptions and Subrogation

Spanish Banks are reducing each month the amount of loans they are completing under subrogation. Subrogation allows new buyers to take over existing loans. The Banks are moving away from regularly agreeing subrogation because existing loan deeds have historic and preferential rates than new loans. In July 2013 subrogation of mortgages dropped by 58% in comparison to July 2012.

Year on year and for at least 24 consecutive months mortgages cancelled outstripped the amount of new loans completed both in turn of numbers and capital. The number of loans redeemed for residential homes was 24,599 in July and number of new loans completed on residential homes totaled 13,777. July saw the highest net outflow from the Banks mortgage books since the crisis began.

Their appears to be a big gap in the market for a new lender in Spain.