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