Spanish Banks and compulsory products

Spanish Bank margins

Spanish Banks in effort to maintain profitable margins have increasingly become insistent that borrowers and those making a mortgage application contract with the lender a number of compulsory products.

Life cover linked to a loan in Spain

The product most resented by applicants is life cover as many already have enough cover from other providers or via work and the new cover is not necessary.

Often the cost of life cover can turn what is a competitive interest rate into a very costly loan particularly where the borrower is older and or the loan size is large.

To prevent applicants cancelling life cover at a later date most Banks now write into the mortgage deed a rate increase if this happens or take all the life cover premiums upfront by adding it to the mortgage amount granted. This means the borrower is not only paying for life cover they may not require but will be paying interest on it too.

Danger for the Banks

Despite losing a number of recent court cases surrounding unfair practices the Spanish Banks are ignoring this ticking time bomb which may affect profitability in later years if the Courts decide they could not insist the product was taken and are required to compensate borrowers.

Read the full article:- Is life cover the next Spanish Banks ticking time bomb

April loans in Spain reduce

April loan statistics

Following on from March when loan levels were below the same month of last year April has continued this trend.

On top of being down on the same month of the previous year by over 20% April also saw a reduction in numbers of Mortgages in Spain , capital lent, and average loan size against March 2017.

Regional variations

All regions in Spain saw a downturn of loan completions against last year and the previous month.
Most regions remain up for the year due to very high levels of completions in January and February but it is concerning we have seen two months of stagnation.

Home loan credit

The percentage of all credit flowing from the lenders into the market for the purpose of buying a home dropped 54.6%. Normally this is above 60% of all credit. This indicates that buyers are holding off in Spain due to a number if factors including Brexit and the concerns over the fragile economy growth in Spain.

Spanish Banks loan books reduce again

After a few months of either net loan book gains April and a negative outflow although not at the same level as we have seen in previous years.

Read the full article:- Mortgages in Spain monthly statistics

March loan activity in Spain

Mortgages in Spain rise in March

The level of new capital lent for the purpose of buying a home rose in March.

The average loan size of Mortgages in Spain dropped slightly over February but increased numbers of new home loan credits meant overall the amount of capital grew.

Coastal areas increase

Coastal areas and major Cities like Madrid in general are showing good increases in mortgages both for the Month and across the year. The Canary Islands and Murcia are exceptions to this both are struggling to match last years activity levels.

Spanish Banks news

BBVA who have a UK Division announced they will remove themselves from any new lending in both the UK and Spain. Regulated by the UK for the activity undertaken there this may be a response to their concerns over the impact of Brexit on financial service activity. It may equally be that the division struggled to meet the volumes necessary to make the offerings worthwhile.

Other Spanish Banks have this month started to offer IMS clients special deals for a limited period in an effort to pull back some market share.

Banco Popular has come under severe scrutiny in May and is actively looking for a buyer due to the pressure on its balance sheet due to toxic debts and its large property portfolio.

Net mortgage book outflows

Other news includes a reverse of the past couple of months where Banks in Spain have seen their loan books grow slightly. May was a month of net outflows with more loans cancelling than new loans being constituted.

Read the full article:- March mortgage data in Spain

Mortgages in Spain numbers drop in February

Spanish loans

In February the number of Mortgages in Spain registered at land registry and new loans signed in the month dropped in comparison to January.

Capital lent increased however due to a higher average loan size.

Whilst normal for Februarys home loans to decrease against January the drop in numbers was the largest percentage drop for the last 5 years.

House loans

The amount of new credit in the market that related to the purchase of a house also dropped in February.

Fixed rate versus variable rates

Fixed rate loans continued to grow, taking a share of 38% of all new loans, the fixed rate interest level was less than the previous year but overall rates increased marginally.

Brexit causes uncertainty

Coastal areas saw the biggest drop month on month for new loans perhaps under pressure from uncertainty of non resident buyers who mainly come from the UK.

Regionally across the first two months of 2017 against 2016 most regions are still showing an annual increase.

Mortgage book losses decrease

Spanish Banks saw a net loss to their mortgage books for the month after January where there was a small gain but the loss has slowed considerably.

Read the full article :- Numbers of Spanish loans drop in February

2017 January Spanish lending grows

The first month of the new year saw positive growth in Spain for new lending contracted.

Loan levels increase

Across the board all regions increased year on year and month on month in terms of numbers of loans and capital lent.

Spanish Banks will be happy to see that for only the second time in many years the amount of newMortgages in Spain taken was greater than the amount of loans cancelled.

Fixed rate products

Fixed rates continued to grow as the choice of borrowers and now makes up well over 30% of all Mortgages in Spain completed within the month.

A wide range of fixed rates are now available from most lenders with fixed rate terms ranging from 5 years to 30 years. Due to a lack of re-mortgage facilities in Spain and the high costs of taking a loan to a new lender, fixed rates are a very viable option for borrowers.

Spanish Banks have very keen pricing on their fixed rates products and whilst still above the variable rate options due to the low Euribor, they appear to provide a very good medium to long term option.

Best performer the Balearics

Regionally all regions performed above December of 2016 and January 2016. the Balearics had the highest percentage increases and the Canaries the lowest.

Read the full article :- Positive start for 2017 for loans in Spain

2016 mortgage market overview

Spanish lending performance in December.

December saw a mixed month of mortgages in Spain with most regions showing numbers below those of November but all increasing year on year.

Average loan sizes rose in December so despite the drop in numbers the actual capital lent did not fall so heavily.

Full year results

Across the whole year, now the full 12 month completions data is available, Spanish lending saw it best year since 2012.

Total numbers of new loans and capital lent grew in all regions over 2015 although the pace of growth was a little behind 2015 to 2014 levels.

Fixed rate growth

2016 saw the mix of variable rate product types drop and fixed rate product types grow dramatically. All Banks in Spain launched fixed rate products and the share of the total new lending market grew from around 5% to over 30% in 12 months.

Net outflows continued to be a problem with over 28,000 more loans being redeemed than new loans being constituted. This has now been the case for every year since the banking crisis.

Brexit impact

Brexit hit non resident loan levels for a couple of months but UK applications have increased for the first two months of 2017. Whether the triggering of Article 50 pushes this backwards will be clear over the next few weeks.

Read the full article:- 2016 mortgage market in Spain

Lending in Spain increases

Spanish mortgage lending

Lending in Spain increased in November over both the previous year and the previous month.

The average loan size dropped month on month but higher volumes up over 32% meant capital lent was higher.

Lending activity

Activity for the year in most regions has increased in 2016 over 2015 and this should remain the case as the year end reporting comes in next month.

Interest rates

Fixed rates have been the main story of the year and the percentage of loans that completed with this mortgage product type hit 31.8% of all lending in November.

Average interest rates rose but very slightly and have been stable all year.

Challenges for the Spanish lenders

Spanish Banks will pleased with the increase in  volume although it will fall behind their target levels. The biggest pressure for the lenders has been that numbers of loans cancelling within year have continued to outstrip new loans constituted.

Read the full article:- Loans in Spain increase year on year