Positive news for Spanish Mortgage completions

July mortgage data from the INE in Spain published today showed an increase in mortgage completions both year on year and month on month for the first time in many years.

Numbers of new Spanish loans

Numbers of loans granted relating to residential dwellings were up 28.8% from the same month of the previuos year. Due to slightly lower loan sizes the capital lent was only up 0.3% but the trend is moving in the right direction.

July is the second month in succession that an increase when related to the same month of the previuos year has been upwards. This strengthens the belief that mortgage availibilty is improving as over the last 5 years it has been normal for the number of mortgage completions in July to be below those of the previuos month of June and in July this year more completions took place than in June.The mortgage application process continues to volatile but more cases are now being accepted by the risk teams as commercial pressures to complete on loans increases.

Interest rates

Variable rate loan types continued to be the basis on which over 90% of mortgages completed with only 6.2% of loans completing on a fixed rate. Most Spanish loans competed linked to the Euribor with a small amount being linked to the IRPH replacement BPT. Banco Popular now seems to be one of the few Banks using the Spanish home loan index.

Average interest rates for July were 3.9% a 7.7% reduction on average rates for the same month last year. This is partly due to a decrease in the 12 month Euribor but more to do with drops by the Spanish Banks in interest margins charge as competition for new loans contnues to increase.

Regional performance

Andalucia and Madrid were two of the top regions in numbers of loans granted with only Castilla, of the major regions, showing any decrease.

Mortgage book outflows continue to outstrip new loans

For yet another subsequent month the amount of loans redeemed continued to exceed new loans constituted by around 6,000. This seems to be the only issue in what otherwise is a positive trend. With mortgage targets back in place this year Spanish Banks will be hoping that before the year end the net outflow of capital lent and numbers of loans granted starts to outstrip the loans canceled so they can slowly rebuild their mortgage books with profitable and perfroming loans.

Read full article: Spanish banks increase lending in July

Spanish mortgage market update

Mortgage enquiries on the increase in Spain

With prices being reported as rising in Spain and this trend expected to continue many potential buyers are starting to consider whether 2014 is the right time to buy and what finance facilities are availble for non resident buyers.

In tangent with a drop in demand on the purchase side caused by the economic difficulties in Spain and the overall uncertainties the same issues affected the spanish Banks and it has been widely reported that over the last few years Spanish Banks had pretty much withdrawn from lending.

Whilst the no lending was somewhat overstated it has never the less been diffcult to secure borrowing in Spain since 2008 and product terms for those requiring borrowing have been pricey.

New mortgage terms and conditions

The floodgates are by no means open but bit by bit as 2014 has progressed we have seen significant changes in the mortgage market in Spain. Slowly but surely the Banks have started to raise loan to values for private purchases, decrease margins above Euribor and relax stringent and in some cases impossible criterias.  

Access to Spanish loans

Access to borrowing is improving although the amount of Banks in Spain now is a handful in comparision to a few years ago so limitaions remain as choice of provider has shrunk significantly. Of those lenders left the general market conditions have improved since 2013 as has service levels, speed of underwriting and clarity by way of the new legislation on provision of a FIPRE.

The benefits of good advice

There still remains in the spanish market communication issues and a lack of tangible information. Protection for the consumer is not at the levels of say the UK neither is regulation that dictates what Banks can and cannot do. For these reasons taking experienced and professional advice when considering a Spanish Mortgage is generally a good idea rather than trying to deal directly with a Bank. 

Full article:Product availibilty and terms for mortgages in Spain 2014 update

  

Mortgage completions in Spain show signs of recovery

Spanish Mortgage completions for June 2014

Whilst Spanish mortgages still struggle to show any real increases for the first time in many months June showed an incraese in both numbers and capital lent when compared to June of 2013.

The months year on year increase whilst the first for a long time were still below those of the previuos month this year and the overall year on year figures remain down.

Spanish Banks mortgage targets

The increase of 19% in nuimbers of loans completed for dwellings when considered against June last year will however give some hope to the Banks in Spain that their targets for the year may still be met. 

Up until June not only were overall numbers down but each Month off the back of a very poor year last year the numbers were down in the corresponding months. June is the first increase indicating a possible reverse of the downward trend.

Net ouflows on mortgage books

Still of concern will be that for many months and years now the net outflow of loans each month has exceeded the level of new mortgages constituted in Spain. June continued this trend with 17,000 new loans and 23,000 cancelled loans.

Regions

The Islands continued to outperfrom most of Spain but big increases were seen in Valencia and Murcia. Of the traditional second home resorts only Andalucia seemed to buck the trend showing a small decrease in numbers of new loans in comparison to June last year.

Read the full article: Spanish mortgage completions increase in June

Mays mortgage completions in Spain continue to fall on last year

Despite having lending targets in place, reducing interest margins and launching new product Spanish Bankhes requesting loas continue to see a decline in new mortgages completed.

Spanish mortgage completions reduce year on year

May figures for mortgage completions in Spain declined on the same month of the previuos year both in terms of number of loans, capital lent and average loan size.

Whilst in the Month of May new mortgages increased from April this is a normal trend for the time of year and is no indicator that things are about to improve.

After many years of actively reducing their mortgage books 2014 has seen most Spanish Banks come back into the lending game. If they thought just opening the doors to credit again would have people flowing into the branches requesting loans, the Banks have been sorely disappointed.

Spanish Banks need to consider their current marketing strategy

With half year figures being well below expectations some of the Banks have started to aggresivley attack the market with new product and marketing campaigns.The real issues that lie beneath the surface are yet to be tackled and include the adding of compulsory products, a fear of the financially comlex high net worth clients and an inability to want to get involved in any areas of lending like re-mortgaging and focussing on purchases alone.

To ensure future earnings, volumes need to increase and the stronger Spanish Banks will need to decide quickly how in a still lack lustre home market they can safely increase credit granted by way of a mortgage.

May key facts 

May saw a decline of 3.4% in numbers of mortgages granted to homes from May last year and annual declines are now over 18%.

Mortgages in Spain completed for residential homes totalled 17,963 and mortgages cancelled in the same period of May totalled 23,405.

Read the full article : Mortgage completions in May is bad news for Spanish Banks

Latest mortgage product improvements in Spain

As per my comments published on the 1st of July surrounding mortgage completions in Spain, and an earlier article in the year the Spanish Banks have reached the half year well behind on their lending targets.

Banks lending targets for 2014

At the beginning of the year for the first time in 5 years most Spanish Banks gave their branch networks mortgage targets. After many consecutive months of net outflows the Banks looked to stabilise and grow their mortgage books through 2014.

Spanish Banks struggle to reach half year lending budgets

Whilst the doors to new mortgage lending was opened little was done by the Banks earlier in the year to encourage new applicants by way of product improvement and pricing.


This lack of understanding that just being open to lend does not mean you will do mortgages has left the Banks well behind their numbers in both capital lent and numbers of new loans particularily in the non resident mortgage market.

Other nationalities applying for a mortgage in Spain have been shocked at the high interest rates which have been well above the rates in many other countries.

With an improving cost of funds situation and better liquidity it is unrealistic to expect new mortgagees to be paying for the past mistakes the Banks have made.

Positive mortgage news for the second half of 2014

The positive news is that in an effort to encourage new mortgages at least 2 of the big 5 Spanish Banks have finally started to introduce new mortgage products, have improved their application process and most importantly are reducing margins above Euribor to realistic and sustainable levels.

The Premier product launched a couple of months ago can now be approved for purchases of € 250k or more down from a minimum of € 400k. The first year premium rate has now been dropped to the first 6 months only and has decreased from a minimum of 3% to a minimum of 2.5%. Variable margins now start at 1.5% above the 12 month Euribor.

With property prices at all time low, currency rates improving and better mortgage terms the second half of 2014 should see an increase in completed mortgages in Spain. 

Read the full article : Spanish Banks drop interest rates to encourage mortgage completions

Spanish mortgages half year news

During the next month the Spanish Banks will take stock of the level of mortgage completions within the first half of 2014.

Mortgage completion levels in Spain

Based on current data all Banks will be behind their yearly targets in both the resident and non resident sector.

Mortgage arrears as a percentage of live mortgage books has hit an all time high and repossessions continue to climb. One of the answers to these two underlying issues the Spanish Banks are experiencing is to grow the mortgage book with performing loans. Whilst each month the Banks have a net outflow of mortgages the percentage of non performing loans will grow.

Growing the mortgage book in Spain

Pressure on the Banks will increase throughout the year in the mortgage arena and further enhancements to product availibilty, a reduction in interest margins and improvements to the mortgage application process are all required in order to stabilise and regrow lending in Spain.

Issues for resolution for non resident loan applications

For non resident applicants the idea that you cannot get a financial approval in place until you have a specific property; and the fact it is not clear with many banks what terms you can expect until after an application has been made and a valuation paid for is completely alien to them; and not in keeping with the transparent and well regulated mortgage process in their own countries.

High margins above Euribor that may have been a necessity during the period of high funding costs for the Banks in Spain are also holding back applicants as often much better terms and conditions can be achieved by using a security in the country of residency rather than taking a Spanish loan.

Whilst there have been improvements during 2014 further rate enhancements, an increase in loan to values, improved financial approval processes and the dropping of compulsory and often unecssary products is required to kick start the non resident mortgage market in Spain.

Read the full article : Mortgages in Spain half yearly update

Finally and increase month on month of property prices in Spain

Data released this month by TINSA one of the most highly used valuation companies by the Banks in Spain for valuation purposes suggest the tide is trurning on price per square meter.

Property price increases from April 2014

Whilst prices in the month of May taken from a selection of formal valuations undertaken continued to show a decline for the year the May average price pre meter increased from April in all areas excpet the Islands.

The largest month on month increase was in the Coastal regions which fits with the upturn on mortgage applications in these areas from International buyers.

The Cities of Barcelona and Madrid and Valencia also saw a month on month increase suggesting in the traditional holiday resorts and areas of commerce activity the bottom of the market is very close.

A wind of change or just a blip

Since the beginning of the second quarter activity levels in terms of buyers and mortgages has increased noticeably. Valuations for mortgage purposes seem to be indicating that property can now being bought at below the level the valuation companies believe could be achieved. All these matters are helping activity and will finally follow through to an overall recovery.

Price increases are likley to be slow but steady in certain areas of Spain and a more fluid mortgage market is still required to push matters along. We are however appearing to now be at the bottom of the curve and moving in the right direction.

Read the full article : Monthly house price report for Spain