Spanish Lending news

News for lending in Spain relating to November 2013 was published yesterday.

Who publishes the Spanish mortgage news

Each month the national statistic office in Spain publishes data taken from land registry as to the number and types of mortgages completed.

In November 2013 there was yet another month of reduced mortgage lending against residential property. This trend has continued for a number of years but was slightly skewed by the high number of completions in the previous year as buyers rushed to Notary to complete on purchases before tax breaks were withdrawn.

Are there positives to be taken from the data

It is dificult to say whether Novembers data is just a continuation of the previous trends or a blip caused by unusual activity from the same time the previous year.

The first few months of 2014 will dictate whether the corner has turned on mortgage lending in Spain or if we still have a way to go.

What is the current attitude of the Spanish Banks

Whilst not as yet showing in the figures published there is now a desire within the Banking industry to start lending again.

Whilst the past few years have seen Spanish Banks reduce their mortgage books by design, it would appear the tide has turned.

In order to maintain their current customer bases and all the linked products that a mortgage brings Spanish Banks have this year re-introdcued lending targets and appear to have some flexibilty on pricing for the right clients and an improved mortgage service.

Read the full article :News for Spanish Mortgage lending

WiII lending in Spain improve in 2014

What happened in 2013

2013 was one of the worst years for mortgages in Spain since the crisis began.

A number of lenders withdrew from the market and pricing and criterias tightened. All Banks in Spain continued to reduce their mortgage books and no lender was activley pursuing new mortgage clients.

Have things changed for 2014

Toward the back end of 2013 and into early January it became clear there was a wind of change.
In the last couppe of weeks we have seen lenders who had withdrawn from the non resident mortgage market come back to the market with new product and those who remained in the market starting to flex their portfolio.

What is the most marked change in lenders attitude

The most telling sign that things will improve in the Spanish Mortgage market is that this year all Branches and Branch staff have been given mortgage targets.

In both 2012 and 2013 due to the lack of focus on lending, mortgage targets were non existent.  The fact mortgage targets are now back in place is the best indication yet that the Spanish Banks are back in the market.

How quickly will this change impact on availibilty

The impact of having mortgage targets is immediate but other changes like reductions in interest rates, more flexible criteria and possibly increased loan to values will be a slow process. It is unlikely that we will see major improvements to overall terms in the immediate future but a level of negotiation will become increasingly possible.

Read the full article: Is there a wind of change for mortgages in Spain

Whats new in the lending market Spain for 2014

2013 for Spanish Banks and Spanish lending became one of the worst years ever.

 

What happened

Lenders continued to withdraw from aggresivley lending and all Banks in Spain shrunk their mortgage books throughout the year.

Rates climbed as margins above Euribor increased despite the drops in the ECB base rate and subsequent drops in the 12 month Euribor.

Criterias for applicants remained tight and underwriting continued to be very volatile.

Are there any changes expected for 2014

A few of the Banks who had either withdrawn from Spanish lending particularily in the non resident market have come back into the market with mortgage product and there are some signs that Banks will have lending budgets for this year.

What is not envisaged is a fundamental change to rates, adding of compulsory products or an easing of loan to values and criterias.

Has liquidity eased for the Spanish Banks

Most Spanish Banks during 2013 consolidated their position to meet new guidlines as specified by the Bank of Spain. Bolstering of balance sheets was the name of the game in 2013 and this will continue in 2014.

Raising of capital either by way of sale of assets, rights issues or by third party investment has helped improve the overall situation. In particular South American Banks have seen buying into Spanish Banks as a good long term investmnet for the future.

Read full article : Whats new for Spanish mortgage lending in 2014

Spanish mortgage completions for September 2013

Monthly mortgage statsitics for Spain

Issued this morning by the INE in Spain are the monthly figures for mortgage completions in Spain.

What is the current trend

For another consecutive month the trend for mortgage completions relating to residential property continues to show major declines both in terms of month to month in 2013 and on an inter-month and inter-annual basis.

Only the Canary Islands are showing any year on year increase to both numbers of mortgages completed and capital lent. All other regions of Spain are showing sharp decreases.

Overall the numbers of mortgages completed are down a third on same time last year.

Interest rates 

Average interest rates dropped slightly in September to August due mainly to a decrease in the Euribor. Spanish Banks continue to grant over 90% of loans on a variable basis with less than 10% of of loans granted or completed on a fixed rate basis.

Redemptions

For another consecutive month numbers of mortgages redeemed were higher than new loans added. This is due to three key factors, lack of demand, tight criterias and high pricing of Spanish loans.

Read the full article: Spanish loans for dwellings

Bankinter in Spain makes pricing changes

This week Bankinter announced changes to its pricing for Spanish Mortgages.

What are the key changes and are they up or down.

Bankinter are dropping, for the first time since the crisis in Spain began, the margins they are charging above Euribor.

This is the second positive sign that the mortgage market may be opening up again after last week BBK announced they were moving back into non resident lending and launched new products.

Why are the Banks starting to look at lending again.

In the longer term it is important Banks in Spain provide mortgages as this is what brings new clients to their customer base and opens up the opportunity to cross sell other bank products.

It is equally important for Spain as a country that they have a competitive and accessible mortgage market to attract foreign investment into the construction industry. There are some real signs that buying property in Spain is again on the increase but along with cash buyers those requiring credit need to be welcomed back.

Who will benefit

All potential applicants will benefit from the changes but by far the biggest benefit will go to those clients who orginate from Scandanavia.

View full artcile about Bankinter Spanish mortgages

Deutsche Bank buys portfolio for SAREB

It was announced yesterday that the German Bank DB is buying a portfolio of asset backed loans from the Spanish bad bank SAREB.

The sale value of $ 435 million includes a number of commercial loans backed by the likes of, shopping centers and tourist attractions along with a number of loans made to developers.

The sale highlights the way in which the retail part of a Bank operates in comparison to its investment arm.

The sale clearly shows the investment side of the Bank has considered Spain, at the right price, a good bet and that the country despite its continuing pressures is starting to come out of the doldrums and that property may yet once again be a good investment for the future .

The retail side of Deutsche Bank

Let us compare the view of the investment arm of DB to the Spanish retail arm, DB Spain just this year pulled out of nonresident lending in Spain unless the applicant earned their income in Euros or were Scandinavian.  Citizens of the UK were precluded from borrowing and for Scandinavians DB put together an ill thought out, complicated currency mortgage which I doubt has many takers.

The rationale for making this move was highlighted as a concern by Germany DB over the increasing default and repossession ratios along with a general pulling back from any aggressive lending.

Currency fluctuations was rather bizarrely blamed for why UK residents were defaulting on loans although a long hard look at how they used to underwrite and validate cases would have been a much better indication of why the problems had occurred.

Why this year

The big question has been why did DB retail chose this year to pull away from Spanish lending. Since the crisis began DB along with all Spanish Banks had become far more stringent on their criteria’s and their checks, had lowered maximum loan to values, pulled away from lending solely against valuation level, and reduced the introducers they would work with.

The outcome of these measures was that the performance of all loans granted since 2009/2010 was very good with low to no defaults. Defaulting loans whilst high, all came from the previous era but because the process of repossession takes so long in Spain the figures whilst looking bad on the surface related to activity undertaken many years ago not the situation as it is today. The decision was very much behind the curve.

Will things change

It can only be hoped that if the German parent is starting to see value in Spain again that at some point next year DB retail Spain will be able to reverse its lending decision and come back into the retail mortgage market. Perhaps they will take advice from their investment arm!

Spanish Bank announces closures, but another launches new Spanish Mortgage product.

Which Bank in Spain is closing branches

Catalunya Caixa, who are owned by the Spanish Government are following in the footsteps of Bankia and closing a number of branches.

Particularly hard hit, as with Bankia, is the coastal areas of Andalucía.

 Catalunya Caixa are withdrawing from all their branches except for one in Malaga which will remain open.With Northern based roots the Bank will withdraw to its heartland in an effort to make itself a saleable entity.

Catalunya Caixas current problems and its requirement for a rescue were driven heavily by its lending to developers and businesses rather than individual loans.

Good news on mortgage product in Spain

On the positive side another Bank in Spain who had withdrawn, for the last couple of years, from lending in the nonresident arena has announced its intention to start lending again. This is good news for those buying in Spain who want the option to take a Spanish mortgage rather than use all their cash reserves.

The product has very tight criteria’s and will only be suitable for applicants with high levels of net incomes and low debts but the overall terms will be amongst the most attractive currently available.

When assessing affordability the Bank will only take account 75% of the net incomes shown on personal tax returns and will then look to see an overall debt to income ratio of no more than 35%.

Who might struggle to meet Bank criteria

Buy to let landlords from the UK will find the product out of their reach on most occasions as no rent generated will be taken into account, but full monthly mortgage liabilities will be.

Because only incomes shown on personal tax returns will be taken into account self employed may also find the criteria difficult to meet.

What are the product terms

The first year rate will 4.5% followed by Euribor plus 3%. The margin above Euribor is the cheapest on the market that comes without compulsory tie-ins outside of a Bank account and buildings insurance.

The applicants will be required to pay the premium for the buildings insurance for the first 5 years at completion. This is to avoid the client taking the buildings insurance in the first year and moving provider in the second year. After the 5^th year the client will be able to take other buildings insurance as long as the insurance is made out to the benefit of the Bank.

The maximum loan to value for nonresident applications will be 60% which is in line with most of market providers.

With their closest rivals charging 3.6% above Euribor a 3% margin without compulsory products is very competitive.

It can but be hoped that others will follow suit and either start to reduce margins to attract more business or for those out of it, come back into the lending arena.