House sales and loans move forward in Spain

Monthly reporting figures

Data out from the two reporting bodies the INE or statistical office and the Notaries in Spain show that mortgage lending and the home sales grew in November.

The pace by which both grew did slow slightly when considering seasonal adjustments and previous months within 2015.

Notary Offices

According to the Notary offices the number of house sales reached 34,918 in November and 25,681 new loan agreements were signed. 

Average price per meter squared declined slightly at € 1.219 after two months of small increases.

Average loan amounts reached € 144.223 up 5.5% on the same month of the previous year.

INE

Data from the INE which looks at contracts actually registered with land registry showed a similar pattern.

Sales of homes was 13.7% up on the previous year with 28,733 sales recorded.

Mortgage lending increased on the same month of last year but dropped back against October of 2015.

Fixed rate mortgage types continued to show a higher share of the overall loan market.

Overall both number of loans and capital lent has steadily increased during 2015 against a low level of transactions in the last few years. 

Resales and new builds

Both sales and mortgages have seen the increases they have against a growing second hand market. Resales are outstripping new build sales by quite someway. New build sales have steadily fallen for the last 19 months.

Read the full article :- Loan levels and house sales in Spain for November

Variable rate or fixed rate which is best

Fixed rates versus variable rates

Currently in Spain for the first time Spanish Banks are promoting fixed rate mortgage products.

Previously fixed rates have been difficult to obtain and have not been competitive so the choice of what product type to elect for has been an easy one when making an application.

The choice now has widened with a range of good fixed rates being offered starting at 2.45% for a 10 year rate and 2.75% for 20 years. In general the fixed rate products are for the full term it is not usual as it is in the UK to have a fixed/ variable mixed.

Up sides of fixed rate products are stability of payment during the term of the loan and a hedge against rate increases in the future.

Current market conditions

Whilst the variable rate remains below by an average of 1% that of the fixed rates this is only because the 12 month Euribor is at a historic low. For January the 12 month Euribor is 0.059% but it has been as high as 5.75% and on average across the last 14 years it will have sat at 2.5%. 

With margins above Euribor for variable rate Spanish loans being in the region of 2% to 2.5% it would not take long in an increasing rate environment for the variable to meet and then exceed the overall rates provided by the better fixes. 

Choosing the right product type

Fixed rate products can change between application to offer there is no way during the application process currently to secure the rate you are applying for. Fixed rates also have higher early redemption penalties than their variable counterparts giving less flexibility for those mortgage holders who know they will want to make overpayments or reduce the loan term.

Whilst much will depend finally on personal choice and personal circumstances as to whether a fixed rate is the right route at least there is now a viable alternative in Spain.

Read the full article :- What mortgage product type is the best in Spain