Outlook for mortgages in Spain

Early data published by the INE shows little sign of improvements to the level of mortgages being granted in Spain.

Is there any positive movement for Spanish Loans 

Whilst upfront activity of buyers going through the mortgage application process has been higher in the first quarter indications are from the Spanish Banks that targets for mortgage completions in the first quarter will fall below expectations.

January data out from the INE in Spain seems to support this with January figures showing a decrease in loans constituted below those of the previuos year.

February figures may be a bit more encouraging as January year on year figures will still reflect the fact in late 2012 many buyers raced to complete to beat the end of the tax breaks. The figures shown in the data are from Land Registry not Notaries so there is a lead lag on timescales.

What were the key indicators for January

Overall numbers of Spanish mortgages were down year on year and the numbers of mortgages completed in January in comparision to the December showed a lower increase than the same data from 2012/ 2013. 

Average loan size was up by 1.3% and average interest rates rose slightly as well.

Fitch Ratings Agency annual mortgage report

In a seperate report Fitch ratings agency threw caution on the Spanish Mortgage market and the overall situation for both property prices and arrears throughout 2014. Fitch anticipate arrears peaking in 2014 before starting to fall and alos predict they expect property prices which have fallen by an average of 36% to continue to drop to an average of 40% from the peak before starting to recover in 2015.

In the last quarter of 2013 Spanish banks sold property from their stock at more than 70% below the original valuation levels. This compares with the average discount of 48% since 2009. The indications are Banks are now heavily discounting property in order to clear their books. In order to dispose of large portfolios in one go it is necessary for the Banks to heavily discount prices for the Investment Funds that have popped up over the last few months.

Read full article : Mortgage market indexes in Spain

New Spanish Mortgage product for Nothern Europeans

In the last few weeks Banks in Spain have been opening up for credit.

What are the changes

Whilst this is across the board the Banks are very focussed at present on attracting for mortgages the Northern Europeans.

Falling into this pot are all the Scandanavian countries, Swiss nationals along with the Dutch and those residing in Belgium.

Why are the Spanish Banks keen to attract these clients

There are a number of reasons why the Banks are focussing on these populations. Firstly there are higher numbers of them purchasing in Spain due to low purchase prices and good exchange rates. Secondly the Spanish Banks experience of clients from these countries is that they are less likley than others to default, and thirdly the general veiw is their home economies are stronger than the UK and Southern European countries.

The key incentives the Banks have put in place to gain new business are a reduction in mortgage rates and higher loan to values. For the Scandinavians and Swiss they will benefit from both ends, an increase to 70% loan to value and a reduction in rates. For Dutch and Belgians it is an increase in loan to values from 60% to 70%.

What facilties were available before

Prior to the new mortgage services and products being available only NYKredit a Dansih Bank offered special terms for clients from Sweden, Norway and Denmark. Whilst their product remians attractive they only cover certain parts of Spain and have minimum loan sizes.

The changes are to be welcomed as part of the overall recovery in Spain but in order for things to start flowing it needs to be recognized that margins must come down across the board for all nationalties.

Read the full article : Mortgage news for Scandanavians, Swiss and German Buyers in Spain

Official figures from the INE on Spanish Mortgages

Levels of new loans granted

the level of mortgages granted in Spain in December 2013 as expected were down for the year on a month by month basis and a total year.

Number of new loans  secured against dwellings fell to 12,329 in December down some 30.1% from the same month of the previuos year.

Whilst siginificantly down on last year December 2012 was a better month for completed new loans skewed by buyers buying in Spain to beat the removal of tax breaks that were withdrawn at the end of 2012.

Average loan sizes also dropped in December to € 101.494

Regional variations

Coastal areas held up better in 2013 than the City areas which is possibly a reflection of who is buying in Spain. Non resident mortgage applications toward the back end of 2013 were higher than the start of year.

In the more resident areas like Madrid new loans garnted fell by more than 50% in the month of December.

Average Interest rates and term

The average interest rate for new loans constituted in December was 4.32% which was around 3.78% above the 12 month Euribor.

The average term over which new loans were granted in December was 20 years.

2013 Full year figures

Spanish Mortgage numbers decreased by 27.8% for the whole year. Given each year for the last 5 years the number of new loans granted have decreased significantly hitting overall decreases each year of 20% or more the levelof lending in Spain is now significantly lower than at their peak and well below historic norms.

The level of mortgages being closed within the month topped the 20,000 level in December meaning we had another consecutive month of a net outflow of mortgage balances from the Spanish Banks books. Not split out is how many of these redeemed mortgages related to Banks taking over the property and how closed due to the loan being paid off in full.

2014 what to expect

2014 should show an improvement in overall levels of mortgages granted. For the first time in many years the Banks have lending targets and we are already seeing a small but not insignificant price war happening where the client wants lower loan to values and has low debt to income ratios.

Read the full article: Loans in Spain official figures for December

Reductions in Spanish mortgage rates

What is happening in the Spanish Mortgage market

In an effort to increase in 2014 the level of Spanish mortgage loans, Spanish Banks  have started to launch new mortgage product and decrease overall rates.

The first area to see a change was in the reduction of the first year premium rates from being above the prevailing variable to offering first year rates that are below the current variables.

Moving on from this trend we are now seeing Banks reduce overall mortgage terms and decrease the margins above Euribor for subsequent years.

Spanish loan pricing 

For the last few years we have seen a regular trend of upward margins above Euribor across the board. Back before the crisis in Spain began margins were in the region of 1.25% for non resdients and as low as 0.50% above for residents of Spain. During the crisis these margins moved to as high as 6% above Euribor for non residents and 4% above for residents.

Gradually over the last few weeks we have seen the pricing drop for both international clients and residents of Spain. Some of the best rates out in the market are now as low as 1.95% above Euribor for fiscal residents and 2% above Euribor for international applicants.

Other Banks who have not reduced standard pricing are now however open to negotiation for quality applications.

Compulsory products

When buying in Spain those clients who require a mortgage will still find the rates offered come with linked products. These linked products will always include life cover which is often added as a lump sum at completion to ensure the cover is not cancelled at a later date.

How long due to new European supervision creeping in Spanish Banks will be able to maintain this practice remains to be seen.

Mortgage applicants should always check the FIPER which is issued at offer to see what linked products they are going to be required to take.

read the full article :http://www.imsmortgages.com/blog/reductions-in-interest-rates-latest-news-for-spanish-loans/

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