Mortgage completions outstrip redemptions in Spain

Net mortgages added to books for first time in over 6 years

Spanish Banks have finally managed after years of net outflows to add more new loans to their overall books in September.

Data issued this month by the INE in Spain show that whilst it may constitute baby steps more new loans completed than those cancelled within the month.

Whilst it is too early to say this trend will continue it will be a relief to the Spanish Banks who must have been wondering if they could ever halt the shrinkage on their mortgage books. Whilst after the crisis began in 2007 the Banks had pulled back from lending in a effort to reduce their exposure to the housing market since 2012 most banks have had lending targets and their business models required that net outflows each month stopped.

Numbers of new loans

The number of new loans in September was above 23,000 and was a 20% increase over the same month of the previous year. The increase was slighlty below the increase between August and September of 2014 but never the less was good news as this is now the 8th consecutive month of monthly improvement.

Average loan sozes and capital lent were also higher month on month, interannualy and annualy. 

Interest rates

The average interest rate for home loans was down 7.1% over last year but was slightly higher than the average rate being charged for all credit suggesting business loans and commercial lending remains very competative.

Euribor 12 month was the most used index and variable rate was signed on over 90% of all new contracts.

Regions

Madrid completed on the highest number of loans knocking Andalucia into second place. The Baelerics is the star of 2015 achieving a year on year increase of 74% to date with 3 reporting months still left in the year.

Read the full article : - Mortgage completions exceed cancellations in Spain

August house sales and lending

Notary reports

Each month the Notary offcies in Spain issue a report about the number of house sales and lending taken in Spain.This report is published around the 18th of each month and is published one month in arrears.The data reflects actual house sales signed and actual mortgages in Spain contracted within that Month.

INE reports

At the end of each month and two months in arrears the National office of Statistics in Spain publishes data for mortgage lending as extracted from Land Registry. This data relates to mortgages signed previously that have now bee registered on the deeds and may reflect signings from up to three months before. The information is more detailed but more historic than that provided by the Notary offices.

What do the reports tell us for 2015

Whilst both sets of reporting report at slighty different times and on a different basis both are showing that there is now an improvement year on year for both house sales and Spanish Mortgages.

House sales are up year on year although prices are still under pressure and dropping, all be it at a slower rate.

Mortgage completions are up year on year although in August the number of completions and capital lent dropped from July by 11.9%. This trend of lower completions July to August is normal but given the market has a lot of catching up to do one might have exoected to see normal trends reversed.

 

Lending volumes

All Spanish Banks are back in the lending game and competition is putting pressure on net earnings and yields, which is in turn being reflected in the share price of the Banks. Many challenges remain for Spanish banks who have to balance volume against profit and reductions in non performing loans, which is quickest resolved by increasing your book of performing loans.

Whilst the gap narrowed in August for yet another month more loans canceled than new loans added leaving another month of net outflows.

Read the full article:- Spanish housing and mortgage market recovery

Fixed rate product growth in Spain

Spanish Banks product offerings

Up until recently the mortgage product types available in Spain were predomintaley variable trackers tracking the 12 month Euribor.

Each month over 95% of all loans completed on this basis with only a handful of loans being completed on a fixed rate basis.

Fixed rates 

Most fixed rate offerings, when they were in fact offered by a bank, were much higher than the underlying variable rate, the process of obtaining them was difficult and they did not offer in either the medium or long term good value for money.

Things in the last few months have changed. Spanish Banks, or at least most of them, are now offering a wide range of fixed rate options ranging from mixed fixed rates, which have short term fixes of up to 5 years followed by a variable rate, to fill term fixes for as long as 30 years.

Why consider a fixed rate now

No longer are the fixed rates well above the variable but appear to offer long term stability at very low interest rates. Whilst because interest rates across the world are very low currently the fixed rates do not match current levels given rates are likley to rise across the years a loan is held the rates at an average of 3.25% for a full 20 years look to be a good bet.

Applying for a fixed rate

When applying for a fixed rate the application process remains more diffcult than for variable due to the fact you cannot be sure what rate finally you will be offered and what products you will have to contract with the Bank to achieve the rate required. Early repayment penalties are higher and should be taken into consideration when deciding on the right product for a client. Fixed rates are not right for everyone but where as they could not be consideered at all in Spain last year, now they should form part of any Spaish advisers product portfolio and best buy tables.

Read the full article.- Fixed rate mortgages in Spain

Spanish House transfers

Numbers of homes changing ownership 

August figures as issued by the INE in Spain show that the number of dwellings changing hands in Spain has increased year on year for another Month.

Sales of homes increased by over 20% against the same month of the previous year although dropped back in numbers form Julys figures. Whilst August sales were lower than Julys this is a normal trend. Only once in the last 5 years has August outsold the month of July.

Mortgage facilities

Spanish Banks have improved their loan offerings to non resident borrowers which is just as well as the housing recovery is being led by an increase in foreign buyers. This can be evidenced by the fact that regionally those with the highest absolute sales and those with the highest increases over last year are all the well known Holiday Home spots for those looking to own a property in Spain. 
Andalucia leads the way in terms of absolute numbres of homes sold with Mallorca and the Balearics leading the way in percenatge increase year on year.

Best Region

Murcia which up until now has lagged behind other areas due to a high level of vacant and surplus property, bank reposessions and falling prices bounced back in August and was up over 49% on the year before.

Resales

Resales outsold New Build sales and New Build sales continued to suffer as has been the case throughout 2015. Private sellers seem to be offering better value for money and in general due to valuation levels are easier to maximise loan facilities on.

Read the full article.- Property transfers in Spain

Increased lending activity helps house sales

INE and the Notaries reports

Data published by the INE in Spain and the Notaries continues to support the veiw that a slow but sustained recovery of the housing market is taking place in Spain.

House sales July

Julys house sales figures from the INE taken from land registry shows that sales were up 13.9% against July of last year.

Julys figures when compared to Junes were also up 7% so up month on month and year on year.

Private sales lead the way

The recovery is being pushed ahead by resales with new build figures remaining in the doldrums. New build sales continue to be down on the previous years and losing momentum month on month. This is partly due to pricing and the more positive manner in whuch private sellers are willing to negotiate.

June loan signings

The Notaries who are reporting against June but with figures taken from signing rather than land resgitry show that house sales were up 19.4%.

Mortgage lending was up 18.85 with 16,002 new loans signed in June and average loan amount up 4.8% at €121. 445.

Prices however dropped in June by 0.3% bringing the total decline in house prices sonce 2007 to 33.6% as an average across Spain. With Spanish Banks alowing an increase in loan amounts the suggestion is therefore that the average loan to value is increasing.

Read the full article:- Sale of homes and lending data Spain
 

Positive June lending for spain

Postive lending figures for June in Spain

Despite very positive figures in June for Spanish home loans this good news was tempered by the fact that the gap between new loans being constituted and loans being cancelled remains a porblem for the Spanish Banks.

Whilst 21,454 new home loans were up on the books in June and registered at land registry over 27,000 mortgages were redemmed or cancelled. After the boom of the first half of the decade and a lending market that was over exposed Spanish Banks looked to reduce their overall lending book.

This strategy was enhanced by increasing of margins and tightening of criteria and that along with the economic woes of Spain ensured that the mortgage loan book of all lenders decreased. considerably.

Spanish Banks want to increase lending

In the last few years the Banks have looked to stem this tide and have come back to the market with better mortgage rates and more pragmatic risk assessment. Despite all of this they seem unable to reverse the trend. A reducing mortgage book eventaully has a knock on affcet on the percenatge of bad loans against the entire lending book and will in the long term affect earnings.

Highlights for June data

For June numbers of new loans were up 8.7% on May, the first time in 5 years that June has outperformed the previous month. Capital lent increased by 31.1% against May, again for the first time in many years.

For the month of June loan numbers increased by 26.3% over June of last year and is up 21.1% anually accumalted for 2015.

Interest rates remain stable and floating rates the number one choice for borrowers.

Regional performance

Andalucia saw the most new loans in the month and was of those areas normally appealing to overseas buyers wishing to own in Spain the best performer in the Month.

Read the full article :- Despite increases in new Spanish mortgages net outflows remain in Spain

House sales rise in line with Mortgages increasing in Spain

INE data

The INE in Spain published the transfer of property rights data for June yesterday.

The data taken from land registry shows that across all transfers of properties there was a significant rise when compared to June of last year. Buying in Spain for many years in the doldrums is now motoring ahead.

Resales and new builds

The sale of dwellings, one of the most important sectors was up 17% with total sales exceeding 30k thousand. Of the sale of homes 21.7% were new builds and 78.3% were resales. Developers continue to have a hard time in the market place with most buyers seeing resales as providing better value for money. 

Whilst sales of new builds were up by slightly on May of this year in total year on year they were down 30.6% whilst the sale of used homes were up year on year by 44.5%.

Increasing sales

With an increase of 3.8% over May of this year June 2015 was the first June in over 5 years to show positive growth between the two months.

International Mortgage Solutions SL who have operated in Spain since 2002 supported the data stating that May and June of 2015 were the best two months for loan completions in over 7 years and both months were up over 70% on the previuos year.

By Region

Regions most attractive to non resident buyers all had the highest absolute level of sales, some of the highest percentage increases and the most sales per 1000 registered residents, supporting the fact that foriegn investment in holiday homes and houses in Spain is on the increase again.

Sales are being helped by a weak Euro, low Euribor rates, lower interest rates being charged by Spanish Banks and prices for houses appearing to be at the lowest they are likely to fall.

Read the full article :- House sales for Spain in June