Outlook for mortgages in Spain

Early data published by the INE shows little sign of improvements to the level of mortgages being granted in Spain.

Is there any positive movement for Spanish Loans 

Whilst upfront activity of buyers going through the mortgage application process has been higher in the first quarter indications are from the Spanish Banks that targets for mortgage completions in the first quarter will fall below expectations.

January data out from the INE in Spain seems to support this with January figures showing a decrease in loans constituted below those of the previuos year.

February figures may be a bit more encouraging as January year on year figures will still reflect the fact in late 2012 many buyers raced to complete to beat the end of the tax breaks. The figures shown in the data are from Land Registry not Notaries so there is a lead lag on timescales.

What were the key indicators for January

Overall numbers of Spanish mortgages were down year on year and the numbers of mortgages completed in January in comparision to the December showed a lower increase than the same data from 2012/ 2013. 

Average loan size was up by 1.3% and average interest rates rose slightly as well.

Fitch Ratings Agency annual mortgage report

In a seperate report Fitch ratings agency threw caution on the Spanish Mortgage market and the overall situation for both property prices and arrears throughout 2014. Fitch anticipate arrears peaking in 2014 before starting to fall and alos predict they expect property prices which have fallen by an average of 36% to continue to drop to an average of 40% from the peak before starting to recover in 2015.

In the last quarter of 2013 Spanish banks sold property from their stock at more than 70% below the original valuation levels. This compares with the average discount of 48% since 2009. The indications are Banks are now heavily discounting property in order to clear their books. In order to dispose of large portfolios in one go it is necessary for the Banks to heavily discount prices for the Investment Funds that have popped up over the last few months.

Read full article : Mortgage market indexes in Spain