Positive news for Spanish Mortgage completions

July mortgage data from the INE in Spain published today showed an increase in mortgage completions both year on year and month on month for the first time in many years.

Numbers of new Spanish loans

Numbers of loans granted relating to residential dwellings were up 28.8% from the same month of the previuos year. Due to slightly lower loan sizes the capital lent was only up 0.3% but the trend is moving in the right direction.

July is the second month in succession that an increase when related to the same month of the previuos year has been upwards. This strengthens the belief that mortgage availibilty is improving as over the last 5 years it has been normal for the number of mortgage completions in July to be below those of the previuos month of June and in July this year more completions took place than in June.The mortgage application process continues to volatile but more cases are now being accepted by the risk teams as commercial pressures to complete on loans increases.

Interest rates

Variable rate loan types continued to be the basis on which over 90% of mortgages completed with only 6.2% of loans completing on a fixed rate. Most Spanish loans competed linked to the Euribor with a small amount being linked to the IRPH replacement BPT. Banco Popular now seems to be one of the few Banks using the Spanish home loan index.

Average interest rates for July were 3.9% a 7.7% reduction on average rates for the same month last year. This is partly due to a decrease in the 12 month Euribor but more to do with drops by the Spanish Banks in interest margins charge as competition for new loans contnues to increase.

Regional performance

Andalucia and Madrid were two of the top regions in numbers of loans granted with only Castilla, of the major regions, showing any decrease.

Mortgage book outflows continue to outstrip new loans

For yet another subsequent month the amount of loans redeemed continued to exceed new loans constituted by around 6,000. This seems to be the only issue in what otherwise is a positive trend. With mortgage targets back in place this year Spanish Banks will be hoping that before the year end the net outflow of capital lent and numbers of loans granted starts to outstrip the loans canceled so they can slowly rebuild their mortgage books with profitable and perfroming loans.

Read full article: Spanish banks increase lending in July