Performance of housing and loans in Spain

House sales in Spain continue to rise but slowly.

Whilst the level of mortgages both in terms of number of loans and capital lent are growing at a fast pace when compared to 2014 the actual sales of homes has stagnated a little.

Resales continue to be buoyant with Villas and Town Houses being the favourite choice. New builds and apartment sales are however weak pulling down overall figures.

Mortgages for the purpose of construction whilst above previous years levels showed signs of weakening in October a reflection of perhaps the concerns of sale levels for new builds.

Mortgages in Spain

Against Septembers very good figures October loan levels fell back slightly. Year on year both against the same month in 2014 and accumulated across the year mortgages in Spain have however risen. The Balearics leads the way up over 60% on last year. This is also reflected in the increase of purchasers looking to own a home in Spain.

Fixed rate best buys continued to strengthen the split between fixed rates and variable rates but variable rate contracts continue to make up over 90% of all new loans constituted.  

Average interest rates fell again in October due to the continuing drop in the 12 month Euribor. Margins above Euribor being offered by the Banks seems to have stabilized at with no sign of a price war being on the horizon for 2016. 

Banks in Spain

Whilst the Banks in Spain have pressures for next year on interest margins and overall profitability the challenge from the Governor of the Bank of Spain is for the banks to improve their cost bases, close Branches, undertake further amalgamation, and improve internet services and activities to bring them in line with other European countries.

Read the full article:- Spanish mortgages continue to recover but house sales growth is slow

Mortgage completions outstrip redemptions in Spain

Net mortgages added to books for first time in over 6 years

Spanish Banks have finally managed after years of net outflows to add more new loans to their overall books in September.

Data issued this month by the INE in Spain show that whilst it may constitute baby steps more new loans completed than those cancelled within the month.

Whilst it is too early to say this trend will continue it will be a relief to the Spanish Banks who must have been wondering if they could ever halt the shrinkage on their mortgage books. Whilst after the crisis began in 2007 the Banks had pulled back from lending in a effort to reduce their exposure to the housing market since 2012 most banks have had lending targets and their business models required that net outflows each month stopped.

Numbers of new loans

The number of new loans in September was above 23,000 and was a 20% increase over the same month of the previous year. The increase was slighlty below the increase between August and September of 2014 but never the less was good news as this is now the 8th consecutive month of monthly improvement.

Average loan sozes and capital lent were also higher month on month, interannualy and annualy. 

Interest rates

The average interest rate for home loans was down 7.1% over last year but was slightly higher than the average rate being charged for all credit suggesting business loans and commercial lending remains very competative.

Euribor 12 month was the most used index and variable rate was signed on over 90% of all new contracts.

Regions

Madrid completed on the highest number of loans knocking Andalucia into second place. The Baelerics is the star of 2015 achieving a year on year increase of 74% to date with 3 reporting months still left in the year.

Read the full article : - Mortgage completions exceed cancellations in Spain

August house sales and lending

Notary reports

Each month the Notary offcies in Spain issue a report about the number of house sales and lending taken in Spain.This report is published around the 18th of each month and is published one month in arrears.The data reflects actual house sales signed and actual mortgages in Spain contracted within that Month.

INE reports

At the end of each month and two months in arrears the National office of Statistics in Spain publishes data for mortgage lending as extracted from Land Registry. This data relates to mortgages signed previously that have now bee registered on the deeds and may reflect signings from up to three months before. The information is more detailed but more historic than that provided by the Notary offices.

What do the reports tell us for 2015

Whilst both sets of reporting report at slighty different times and on a different basis both are showing that there is now an improvement year on year for both house sales and Spanish Mortgages.

House sales are up year on year although prices are still under pressure and dropping, all be it at a slower rate.

Mortgage completions are up year on year although in August the number of completions and capital lent dropped from July by 11.9%. This trend of lower completions July to August is normal but given the market has a lot of catching up to do one might have exoected to see normal trends reversed.

 

Lending volumes

All Spanish Banks are back in the lending game and competition is putting pressure on net earnings and yields, which is in turn being reflected in the share price of the Banks. Many challenges remain for Spanish banks who have to balance volume against profit and reductions in non performing loans, which is quickest resolved by increasing your book of performing loans.

Whilst the gap narrowed in August for yet another month more loans canceled than new loans added leaving another month of net outflows.

Read the full article:- Spanish housing and mortgage market recovery

Fixed rate product growth in Spain

Spanish Banks product offerings

Up until recently the mortgage product types available in Spain were predomintaley variable trackers tracking the 12 month Euribor.

Each month over 95% of all loans completed on this basis with only a handful of loans being completed on a fixed rate basis.

Fixed rates 

Most fixed rate offerings, when they were in fact offered by a bank, were much higher than the underlying variable rate, the process of obtaining them was difficult and they did not offer in either the medium or long term good value for money.

Things in the last few months have changed. Spanish Banks, or at least most of them, are now offering a wide range of fixed rate options ranging from mixed fixed rates, which have short term fixes of up to 5 years followed by a variable rate, to fill term fixes for as long as 30 years.

Why consider a fixed rate now

No longer are the fixed rates well above the variable but appear to offer long term stability at very low interest rates. Whilst because interest rates across the world are very low currently the fixed rates do not match current levels given rates are likley to rise across the years a loan is held the rates at an average of 3.25% for a full 20 years look to be a good bet.

Applying for a fixed rate

When applying for a fixed rate the application process remains more diffcult than for variable due to the fact you cannot be sure what rate finally you will be offered and what products you will have to contract with the Bank to achieve the rate required. Early repayment penalties are higher and should be taken into consideration when deciding on the right product for a client. Fixed rates are not right for everyone but where as they could not be consideered at all in Spain last year, now they should form part of any Spaish advisers product portfolio and best buy tables.

Read the full article.- Fixed rate mortgages in Spain

Spanish House transfers

Numbers of homes changing ownership 

August figures as issued by the INE in Spain show that the number of dwellings changing hands in Spain has increased year on year for another Month.

Sales of homes increased by over 20% against the same month of the previous year although dropped back in numbers form Julys figures. Whilst August sales were lower than Julys this is a normal trend. Only once in the last 5 years has August outsold the month of July.

Mortgage facilities

Spanish Banks have improved their loan offerings to non resident borrowers which is just as well as the housing recovery is being led by an increase in foreign buyers. This can be evidenced by the fact that regionally those with the highest absolute sales and those with the highest increases over last year are all the well known Holiday Home spots for those looking to own a property in Spain. 
Andalucia leads the way in terms of absolute numbres of homes sold with Mallorca and the Balearics leading the way in percenatge increase year on year.

Best Region

Murcia which up until now has lagged behind other areas due to a high level of vacant and surplus property, bank reposessions and falling prices bounced back in August and was up over 49% on the year before.

Resales

Resales outsold New Build sales and New Build sales continued to suffer as has been the case throughout 2015. Private sellers seem to be offering better value for money and in general due to valuation levels are easier to maximise loan facilities on.

Read the full article.- Property transfers in Spain

Increased lending activity helps house sales

INE and the Notaries reports

Data published by the INE in Spain and the Notaries continues to support the veiw that a slow but sustained recovery of the housing market is taking place in Spain.

House sales July

Julys house sales figures from the INE taken from land registry shows that sales were up 13.9% against July of last year.

Julys figures when compared to Junes were also up 7% so up month on month and year on year.

Private sales lead the way

The recovery is being pushed ahead by resales with new build figures remaining in the doldrums. New build sales continue to be down on the previous years and losing momentum month on month. This is partly due to pricing and the more positive manner in whuch private sellers are willing to negotiate.

June loan signings

The Notaries who are reporting against June but with figures taken from signing rather than land resgitry show that house sales were up 19.4%.

Mortgage lending was up 18.85 with 16,002 new loans signed in June and average loan amount up 4.8% at €121. 445.

Prices however dropped in June by 0.3% bringing the total decline in house prices sonce 2007 to 33.6% as an average across Spain. With Spanish Banks alowing an increase in loan amounts the suggestion is therefore that the average loan to value is increasing.

Read the full article:- Sale of homes and lending data Spain
 

Positive June lending for spain

Postive lending figures for June in Spain

Despite very positive figures in June for Spanish home loans this good news was tempered by the fact that the gap between new loans being constituted and loans being cancelled remains a porblem for the Spanish Banks.

Whilst 21,454 new home loans were up on the books in June and registered at land registry over 27,000 mortgages were redemmed or cancelled. After the boom of the first half of the decade and a lending market that was over exposed Spanish Banks looked to reduce their overall lending book.

This strategy was enhanced by increasing of margins and tightening of criteria and that along with the economic woes of Spain ensured that the mortgage loan book of all lenders decreased. considerably.

Spanish Banks want to increase lending

In the last few years the Banks have looked to stem this tide and have come back to the market with better mortgage rates and more pragmatic risk assessment. Despite all of this they seem unable to reverse the trend. A reducing mortgage book eventaully has a knock on affcet on the percenatge of bad loans against the entire lending book and will in the long term affect earnings.

Highlights for June data

For June numbers of new loans were up 8.7% on May, the first time in 5 years that June has outperformed the previous month. Capital lent increased by 31.1% against May, again for the first time in many years.

For the month of June loan numbers increased by 26.3% over June of last year and is up 21.1% anually accumalted for 2015.

Interest rates remain stable and floating rates the number one choice for borrowers.

Regional performance

Andalucia saw the most new loans in the month and was of those areas normally appealing to overseas buyers wishing to own in Spain the best performer in the Month.

Read the full article :- Despite increases in new Spanish mortgages net outflows remain in Spain

House sales rise in line with Mortgages increasing in Spain

INE data

The INE in Spain published the transfer of property rights data for June yesterday.

The data taken from land registry shows that across all transfers of properties there was a significant rise when compared to June of last year. Buying in Spain for many years in the doldrums is now motoring ahead.

Resales and new builds

The sale of dwellings, one of the most important sectors was up 17% with total sales exceeding 30k thousand. Of the sale of homes 21.7% were new builds and 78.3% were resales. Developers continue to have a hard time in the market place with most buyers seeing resales as providing better value for money. 

Whilst sales of new builds were up by slightly on May of this year in total year on year they were down 30.6% whilst the sale of used homes were up year on year by 44.5%.

Increasing sales

With an increase of 3.8% over May of this year June 2015 was the first June in over 5 years to show positive growth between the two months.

International Mortgage Solutions SL who have operated in Spain since 2002 supported the data stating that May and June of 2015 were the best two months for loan completions in over 7 years and both months were up over 70% on the previuos year.

By Region

Regions most attractive to non resident buyers all had the highest absolute level of sales, some of the highest percentage increases and the most sales per 1000 registered residents, supporting the fact that foriegn investment in holiday homes and houses in Spain is on the increase again.

Sales are being helped by a weak Euro, low Euribor rates, lower interest rates being charged by Spanish Banks and prices for houses appearing to be at the lowest they are likely to fall.

Read the full article :- House sales for Spain in June

Repossesions Spain

Foreclosures in Spain

Since 2013 the Bank of Spain as part of its regulatory role has required Spanish Banks report on the breakdown of default activity and the final result of any judicial actions taken.

The data is to help assess the human impact and finacial impact on both Banks and borrowers.

Driven by much crtisism of how evictions were being handled and the suicide of a number of home owners prior to enforcement agencies removing them from their homes the numbers show a stark difference in how many defaulting loans are ending up with enforced evictions.

By far now the trend is toward only taking over unoccupied property or ones where the mortgage holder in Spain has agreed to hand back the keys in full payment of the debt.

Types of action taken by Banks in Spain

Only 25 evictions where law enforcements were involved took place in 2014.

In comparision to 2013 repossesions continued to rise as a percenatge of all mortgage holders, but far more went down the "Dacion en Pago" route. Dacion en Pagos whilst meaning you lose your home is a much more long term reasonable solution as you do not continue to carry a debt that the Banks can pursue until paid in full.

There has been a change in recent years to the approach of Banks in Spain for those who are not paying a loan on their primary residence with many Banks now having a no forced eviction rule.

Second home owners

Second home owners like non resident buyers in Spain who have a Spanish Mortgage are likely however to find the lenders much less inclined to go down an agreed foreclosure route so court cation on failure to pay and a debt outstanding at th end of it is more likley for this type of borrower.

Read the full article.- Mortgage reposession data for Spain 2014

Spanish home loans increase again May

Land registry data

Data out today from the statistical office in Spain confirmed the data pusblished by the Notaries and shows Spanish home loans continue to rise year on year.

Total lending was up 7.3% over last year but 10.9% up for those relating to the purchase of homes in Spain.

Both numbers of and capital lent increased both year on year and month on month although the increase of May figures over Aprils of this year was the lowest for the last 5 years.

Variable rate product types made up over 90% of loans signed and the Euribor was the index used in more than 90% of all transactions.

Interest rates

The average interest rate was 11% down on that of last year but marginally up on April. The Euribor fell slightly in May so the higher average rate is due to higher margins charged by the Banks in the month of May. This will most likley be a blip as competition amongst Spanish Banks to secure resident loans remains high.

Regions

The Balearics and the Canaries against better than average perfromance in 2014 both lagged behind the trend of increases seen in other regions and only Asturias as a region is behind 2014 when considering the data for the year so far.

Net outflows for another month

Total number of home loans signed and registered were 19,732 in May but mortgages canceled for yet another consecutive month outstripped new loan deeds signed.

Cancellations totaled 24,433 meaning the overall book of home loans fell by 4,701 and over 1m of capital left the books yet again.

Read the full article:- Land registry lending statistics for Spain in May



 

Mortgages in Spain increase in May and House sales are up

Notaries in Spain

The Notaries council called Consejo General del Notariado publihsed last week the high level data for Mays mortgage completions and house sales in Spain.

Mortgage levels were up by 26.4% year on year and the average loan size rose 6%.

In total 14,213 new loans were granted.

House sales continued to rise up 8.4% but the average price continued to drop slightly.

Annually mortgages are now up 11.5% in 2015 over 2014 and the average loan amount has increased by 3.6%.

Spanish Banks

For the first 6 months of 2015 the Spanish Banks have continued to more aggresivley lend.

This desire to secure more mortgages has helped improve the terms and conditions not just for Spanish residents but also for non resident buyers.

Whilst variable rate remains the most widely offered option more and more lenders have looked to offer long term fixed rates allowing applicants to tie themsleves into competitive long term rates covering the whole of the mortgage term.

Fixed rates can be offered from as low as 1.99% for 20 years but as with all Spanish Loans a number of linked products have to be taken with the lender to secure the lowest possible rate. Direct bank staff are not always as good as they could be at explaining this preferring to focus on headline rates rather than the nitty gritty of obatining them.

Lending Criteria

Criterias continue to be maintained with lenders looking for mortgage applications to demonstrate the borrower is not utilizing in general more than 35% of their proven net incomes for the purpose of debt payments.

Borrowers who are company onwers and do not draw all the income they could each year still have some issues getting Spanish Banks to accept the higher possible incomes rather than those incomes shown on personal tax returns.

More and more lenders are willing to look at 70% loan to value rather than the more standard 60% but many will only do so on a case by case basis for those mortgages they deem to be of more significance to them, and from applicants who meet criteria easily.

Read the full article :-Mortgages in Spain 2015 market update

 

Property transfers in Spain

Mays property sales

Total property transfers in May despite positive noises coming out of Spain remained level with the same month of last year.

The data taken from Land Registry is not the most up to date reflection of what is happening at ground level as it takes 3 to 12 weeks for the registry office to process the file. This means the data can relate to property transfers from some months ago. This said it is relevant against its own reports which have always reflected actual sales but with a time lag.

Dwellings

Sales of actual homes performed a little better than the total transfer market which includes, commercial sales, donations, Inheritance and reposessions.

Sales of homes increased year on year, month on month and remains up for the whole of 2015 when assessed against 2014.

Mays sales are normally higher than Aprils so whilst the trend of increased sales continues the actual increase of May over April was actually the smallest seen for at least 5 years.

Types of property sales

Part of the potential slow down of growth seems to be linked to the dramatic fall off of the buying of new builds. This drop in new build sales may be because developers believing possibly too soon the crsis was over started to increase the prices they were asking for even on developmets  that had been built for sometime and sat empty often for years. A missjudgement of market conditions has had an impact on volume.

Tied into developers loans and with Spanish banks requiring the developer maintains mortgage payments until sale of the unit to a third party it might well be the case that we see discounts on new builds again as the year progresses.   

Regional sales

Regionally, of those areas most attractive to International buyers, Andalucia performed strongly up in all areas in terms of year on year, month on month and for the whole of 2015.

The Balearics which has seen high level of interest for mortgage applicants from overseas buyers in the last 12 months fell back in May and has had a couple of quiet months. The same is true of the Canaries but this has also been reflected in the number of people looking to secure a financial approval for a mortgage in Spain.

The rest of 2015

The Notaries have been reporting miuch higher buying activity along wityh higher activity on Spanish Bank loans so we should see this start to be reflected more significantly in the INE data over the next couple of months.

Read the full article : The transfer of property rights for Spain in May  

Aprils mortgage levels fall back from March

Loans made and capital lent

Data out in Spain last week showed a decrease in numbers of loans and capital lent when considered against the month of March.

Although a little disappointing this is the normal trend when looking at what happens  over an extended period of years. Only once in the last 5 years has Aprils mortgages in Spain been higher than in the March.

When considering numbers of loans and capital lent against the same month of the previous year the picture looked a little more rosy. Numbers of loans were up 21.4% at 18,857 but the avergae loan size only moved by 0.6% at 100.683.

Types of loans

Variable rate remained the type of loan by which most loans completed with a small increase ion those opting to take fixed rates. More Spanish Banks are offering fixed rates in the currnet market and with rates being low more applicants are choosing to fix for at least a period in time.

The interest rate for all loans including commercial lending was 3.16% in April but for home loans the average interest rate was 3.29%. This unusual statistic may suggest the Banks are keen on and focussed on getting credit to businesses.

Regional performance

Regionally Andalucia was yet again one of the top performers lending the most and showing a small increase over March. The Balearics was one of the few other regions that outperformed March figures.

Net outflows

Net outflows which slowed slightly in March raced away again with a much bigger gap between the amount of loans redeemed or cancelled against new loans constituted.

The data is taken from Land registry so a little behind the data taken at Notary and will relate to copmpletions from the months of February and March.

Read the full article:- Registered mortgages in Spain news for April

News for house sales and mortgages in Spain

Notary report for April

Data published yesterday by the Notaries in Spain suggested house sales increased in April but house prices fell back.

Data published monthly by the Notary Offices gives a more real time overveiw of what is happening in Spain as unlike the Statistical office who report from land registry. Mortgage and home completions take up to 3 months to make their way to Land Registry data so Aprils reporting could reflect what happened in January, February and March.

House sales

House sales climbed by 1.9% in the month of April according to those signed at Notary. Price per square meter however fell back by 3.9% to € 1,188 suggesting that a complete stabilization of house prices has not yet happened. According to the Notaries prices have now fallen 37% since the housing crisis and banking crisis started.

New lending

New loans were up in the month by 12.3% amd over 12k new loans were constituted within the month.

Average loan sizes were up 9.2% at € 122.119 reflecting a more positive risk approach by Spanish Banks.

Mortgages in Spain need a boost  in numbers to prevent the ongoing net outflow of loans to the Spanish Banks books. In an attempt to grow new and profitable business lenders have been much more aggresive in the market place and higher numbers of house sales if this can be sustained will help.

Read the full article :-Spanish Notaries Monthly Housing Report  

Net outflows for lending widen in March

Lending news for Spain remains relatively upbeat in March, except when considering net outflows.

Data issued today by the INE in Spain showed a continuing rise in loan levels in Spain where it relates to mortgages for homes.

Capital lent, number of new loans registered and average loan size all increased against the same month of the previous year.

Against the previous month of February whilst not out of sync with normal yearly trends the figures were not so bouyant. Overall numbers were down with the most significant change being a large drop in average loan size.

Index

Euribor remained the favoured index and varibale rate products continued to form the bulk of mortgage prodcut type completions.Whilst we have seen Spanish Banks launch new and more competative fixed rates in the last few weeks this has not as yet filtered through to changes in the type of loans being completed on.

Interest rates

Average interest rates were down to 3.36% in March partly due to the falling Euribor level but also in part due to a more competative general environment.

Regionally the Canaries had a dire month and Andalucia did not perfrom as well as normal. Madrid had the most capital lent with Cataluna not far behind. The Balearics showed considerable increases within the months against a backdrop of stagnant figures for the first couple of months of 2015.

Net outflows

Net outflow figures widened in March after narrowing in February. Spanish Bank continue to grapple with more loans cancelling than new loans going onto the books and the subsequent challenge this will cause for future earnings.

Read the full article :-Lending registered at Land registry up year on year.

Fiscal approvals for mortgages in Spain

Do Spanish Banks offer financial approvals for buyers

Spanish Banks do offer what is known as an AIP but the quality, validity and process by which it can be gained varies from Bank to Bank.

Some Banks will only send and underwrite a fully documented application when a valuation has been undertaken. This type of Bank should be avoided as it requires the applicant pays for a valuation before even knowing if they are accepted by the Bank fiscally.

Other Banks will offer a full underwrite as long as a specific property can be shown and all fiscal documents are presented.

For applicants who have not found a property a few Banks will still risk assess the fiscal situation but many will just offer viabilty check.

Process of applying for a mortgage

In all instances for the underwrite to have any validity at all a fully packaged application must be presented. Any documnet given to a potential borrower at Branch Level that has either not included providing the formal paperwork or has not been sent tio the Head Offcie risk team is not worth the paper it is written on.

All Banks can provide quotes based on what the applicant is telling them but without this being supported by proof the quote remains just that, an indication of the terms and conditions that can be expected.

Documents required

All loan applications will need to be fully packaged and include the required documents this will mean showing evidence of incomes, which is always net incomes in the Spanish process. Unless the buyer resides on a non tax paying jurisdiction incomes will need to be shown on a personal tax retrun to be assessed.

Supporting bank statements showing incomes being recieved will be needed and so will a copy of the applicants credit file. Spanish Banks cannot credit search an individual in their own country of residency so need the applicant to provdie a copy of their credit file.

Credit score which is a major underwriting tool in other countries is not taken into account by Spanish Banks. The credit file is required only to check what debts are held, how much per month they are costing and the payment history.

Read the full article : - Approvals in principle in Spain

   

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

2015 mortgage news for Spain

Improvements in 2014

2014 saw a marked improvement in the lending facilities for non resident buyers in Spain. Previoulsy focussed on only providing mortgages for the sales of their own properties most Banks introduced lending targets again last year.

Key improvements included some reductions in margins being charged, flexibilty for quality applicants, and a willingness to negotiate on some of the terms and conditions.There remained a lack of transparency with applicants not always being offered the best possible terms but in general Banks wanted to lend.

2015 market place

Already in 2015 a number of Banks who were not lending to non residents in 2014 have made clear their intention to focus on this market in 2015. This will increase competition between lenders and should lead to futher improvements both in terms of conditions and service levels.

What needs to happen

Spanish Banks need to move away from the old fashioned approaches many maintain. Improvements would include allowing a financial approval to be put in place before a property must be valued. Having standard pricing which all branches must adhere to with flexibilty to improve on this for very high quality applications. Improving mortgage rates and being willing to do away with costly and unecessary compulsory products. Spanish Banks should offer instead cost effective other solutions which applicants could elect to take rather than being forced to.

Underwriting

The power shift away from risk to sales will continue during 2015. We will not however return to the gung ho days of the boom years. Sensible but pragmatic risk assessment should be the name of the game. A move away from tick box underwriting and back to the ability to look at each application on its merit and in its entirety.

Read the full article:Spanish mortgage news 2015 outlook

Could taking a mortgage avoid unexpected extra taxation

Spanish tax authorities and purchase tax

Due to past activity where black money was a normal part of the Spanish buying process and accepted as the norm by everyone in Spain, the regional tax authorities have clamped down in Spain to a point where what is happening is neither right or fair.

Since the boom years property prices have dropped significantly in Spain but the fiscal values recorded at the Town Halls have not been adjusted to take this into account.

If a buyer whether cash or with a mortgage genuinely pays a price for a property and this is recorded fully at Notary, but this price is below the minimum fiscal value there is a high probabilty that the regional tax office will insinuate that a cash amount was paid to avoid tax. The tax offcie will then apply tax for the purchase at no less than the minimum fiscal value.

There is no arguing with the tax office who will insist this level of tax is paid and will fine onwers if it is not paid on time.

How can the issue be avoided

The first check a buyer should make is to the fiscal value of the property to check the purchase prcie is not below this. If it is then the buyer can either consider paying extra taxes at completion or building up evidence to show they did recrd the true purcahse price accuratley.

A bank valuation or a formal valuation from an accredited valuation company can help. Valuation companies are regulated by the Bank of Spain so if they say the property is worth less than the minimum fiscal value then the buyer has a very strong defence.

If the property is really worth more than you have paid for it then in Spain you will have to expect to pay taxes on a higher amount. This may not be right but is the reality of how things are.

Read the full article: Can a bank valuation help you save tax in Spain

Spains secured credit data for October

Loans granted

In October the average size of loan granted fell by a small amount but numberts year on year were well up meaning capital lent increased in October 2014 to October 2013 levels by 21.7% for urban property and by 14.9% for other dwellings.

The amount of new credit for all dwellings reached over 5.000 million.

Month on Month

In general the overall numbers and capital lent between September to October as a trend dropped. This was partly due to the fact that September 2014 was a particularly bouyant month and that in the months running up to October there has been a marked increase in the amount of Spanish Loans granted and signed for.

Interest rates

Interest rates fell both month on month and year on year as Spanish Banks reduced margins and improved product terms to try and grab market share and the 12 month Euribor the main index to which credit in Spain is linked fell to an all time low.

Most loans completed as is normal in Spain on a variable rate basis with less than 8% of loans being taken on a fixed rate.

Cancellations

For another month despite the positive news mortgages being redeemed exceeded new loans being constituted. This trend will continue to put pressure on Banks earnings as the mortgage books continue to diminish. It is hoped 2015 will reverse this trend and that a net gain on numbers and capital lent will be added to the loan books.

Read the full article: Secured lending statistics in Spain