Loan completions in Spain

September mortgage completions

Good news for lending in Spain was published yesterday with another month of increases in terms of both numbers of new loans constitued and capital lent.

The level of home loans between the month of the August and September was the highes for many years and overall numbers of credits granted for the same month of the previous year was up 29.83%

2013 versus 2014

Whilst the number of mortgages in Spain has increased for the last few months, due to very low levels of activity in the first quarter, 2014 remains slightly behind the levels of the same time in 2013. The current trend however if followed through in the final quarter of 2014 should mean that for the first time in over 6 years we see either a level or slight increase in total loans on a year on year basis.

Interest rates

Average interest rates fell in September due to a continuing drop in Euribor which most Spanish Banks track and an easing of margins. 

Overall mortgage books

Whilst yet again the amount of mortgages redemmed outstripped new loans completed the gap has narrowed considerably. After many years of loan books reductions this will be positive news for the Banks who for the first time this year since 2007 have had lending targets. Whilst it is unlikely the lending targets will be achieved by most Banks the signs are positive for a better 2015.

Read the full article:-Spanish news. Positive signs for Spanish lending

Year on year increase in Spanish borrowing

August lending data

The number of new Spanish mortgages registered at land registry in August showed another upturn when looking at the same month of the previous year.

Capital lent also increased year on year when looking at the corresponding month of 2013 and the average loan size increased to a point that took loan sizes above the level for the same period of time in 2013.

August completions versus July 

Whilst the news on August numbers when compared to the same time last year was all good the decrease between the numbers of loans secured against homes in August when compared to the month of July was the highest for 5 years. This would appear to be due to an unusually high level of activity in July this year.

Types of Loans

As is normal in Spain the majority of borrowers took lending on a varibale rate basis. Loans with a fixed rate only made up just over 6% of total completions. The average interest rate on which new mortgages completed is down in the last 12 months by over 12 months. Whilst this is partly due to more competative products being launched by the Banks in Spain the biggest driver of lower rates is the decrease in the 12 month Euribor.

The 12 month Euribor continued to be the most favoured index used.

Diffences in Regional activity

Andalucia continued to be the region with highest number of new loans constituted  followed by Madrid and Barcelona. Only the Balearics showed an increase in numbers in August against July and of the non resident favoured markets only the Canaries dropped when looking against the same month of the previous year.

Net outflows

The rate of net outflows narrowed slightly in August suggesting that rate at which mortgages redeem to new finance being taken is slowing and the gap diminishing. After many years of shrinking mortgage books this will be good news for the Banks.

Read the full article: Number of new borrowers increase in August

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