April loans and house sales in Spain

Growth continues in Spain

Growth in terms of both house sales and mortgages in Spain moved forward in April but in some areas growth slowed.

Overall new build sales continued to lag behind that of resales and the level of increase in house sales which had grown since June 2015 to November 2015 fell back in the first quarter of 2016.

The stalling of the market may have been due to uncertainty surrounding the countries leadership after the first general election in November and may be buoyed going forward by the second election which has just taken place.

Spanish Banks

Spanish Banks are certainly keen to lend so financing is not the issue. One interesting outcome of the data issued in June was that the percentage of house sales bought by way of a mortgage in Spain only reached 45% in April. This compares to levels topping 70% in a normal month.

Lenders in Spain  will hope this is a one off and despite this drop in those using finance to buy for the month loans in Spain  increased.

Mortgage lending was up both in terms of capital lent and numbers of new loans. The increase over march levels was lower than perhaps is normal but year on year and annually accumulated the market remains on upward trend.

Interest rates

Fixed rate product types continue to form a larger percentage of the total market rising to 14% of all home loans taken as they are deemed to be the best buys. The average interest rates is settling around 3.20% for the year so far.

The Euribor itself rose slightly in May but dropped back again for June but the stability in rate will be partly down to a preference for both mortgagees and Banks to consider a fixed rate contract.

Canary Islands

Regionally the only area which appears to be struggling across the year to date is The Canary Islands. A natural haven for expat buyers this may have been affected by external matters outside of what is happening in Spain.

Read the full article :- Property and loan market in Spain

Growth slows for Mortgages in Spain

March lending figures down on February

Whilst year on year for the first three months of 2016 lending levels of Mortgages in Spain are up on 2015 in March the rate of increase slowed and across both numbers of and capital lent when assessing the data against February.

The trend of lower loan levels in March is normal but with the housing market appearing to be recovering and Spanish Banks being eager to lend it is slightly surprising we are not seeing month on month increases.

Fixed rates

For 2016 the momentum for fixed rates being chosen as the mortgage product type by applicants is continuing. Each month the share of new loans being completed on a fixed rate basis increases. Whilst from very low levels the increases are significant and show a marked change in the market. All Spanish Banks are now pushing and providing access to fixed rates.

 Lack of clarity around early redemption penalties for some lenders will hold back this trend but in general the fixed rate market looks to be a good medium to long term bet.

Average Interest rates

Average interest rates fell in March due partly to the move to fixed rates and a drop in Euribor over the last couple of months. Whilst still in negative territory for May there was a very small increase the first increase in many months.

Mortgage books

For yet another month the amount of loans being cancelled outstripped new loans being constituted. After many years of actively reducing their loan exposure Spanish Banks will remain concerned about future earnings until this trend can be reversed. Currently there appears to be no end in site with only one month in the last 6 years showing a net gain. Pressure on earnings form this area and the environment of low interest rates means the lenders have to up their game in cost efficeincy and further mergers may be seen this year.

Read the full article:- Loans in Spain for March fall over February

Housing and Banking data in Spain

General statistical reports Spain

Last week and this week saw a number of reports published in Spain in relation to house sales, transfer of property rights and the Spanish Banks.

Overall the transfer of property from one individual to another saw a dip in March both year on year and month on month. When the statistics are broken down the sale of actual homes whilst down on Februarys figures never the less are holding up year on year and annually accumulated.

Drops in urban commercial sales and lower levels of swaps and Inheritance affected the overall figures as did a lower level of transfers falling into other titles which includes Bank repossessions of security half for a mortgage in Spain.

Number of house sales

A total of 31,925 homes were sold in March of such only 6,200 were new builds with the rest being sales of second hand homes. This split is a far cry from the boom years when new build sales outstripped resales.

Sales of homes to foreign buyers both those who are living in Spain and those specifically buying a second or holiday home saw an increase through 2015 of 12.9% according to the council of Notaries.

Foreign buyers are made up of all nationalities but the largest group by quite some way is the British. Foreign buyers who lived in Spain during 2015 bought at a lower price per meter square than in 2014 but those who did not live in Spain paid 2.9% more per meter square than in 2014. This may be due to a number of factors, where they buy, type of property they buy and how they sourced the purchase.

Easing of lending to the non resident market during 2015 and an increase in the number of mortgage product types available assisted the market.

Spanish Banks

Spanish Banks also came under pressure last week as the first round of quarterly results for the major lenders showed a drop in profitability due to margin pressures. With interest rates at an all time low it is difficult to the Banks to remain competitive and still make money.

Further consolidation is expected during 2016 with more mergers possibly on the cards and a further streamlining of the branch networks.

Read the full article:- A mixed bag of Spanish data

Lending news for the Spanish market

Spanish banks

Spanish banks have been hit by a court judgement in the last couple of months that has not only outlawed floor rates but has stated that compensation should be paid for at least those mortgages in Spain completed since 2013.

The judgement will hit earnings and in an effort to avoid future problems many of the banks in Spain are looking at growth strategies outside Spain.

A few of the lenders are proactively approaching mortgagees with floor rates and offering good long term fixes for the benefit of signing away any rights to future action against them.

House sales in February

According to both the notary offices and land registry house sales continued to grow in February. Average price per square meter fell by a small amount but overall sale of homes climbed year on year and against January 2016.

Whether this trend will continue due to the political uncertainty etc will remain to be seen. Certainly the Spanish banks relaxed criteria for lending in the quarter according to the findings of the Bank of Spain. The relaxation of criteria was to help keep mortgage growth moving forward as demand whilst up from previous levels is still seen as weak.

Mortgages in Spain

Lending levels grew both for those registered at land registry and signings within the month of February. Average interest rates rose slightly reflecting the shift from variable rate products to slightly more expensive but more stable long term fixes. Best buys reflect this.

The percentage of loans registered as fixed rate product type was the highest in history in February and should continue to grow.

Net Outflows

More loans were redeemed in the month than new loans constituted so the challenge remains in Spain the same. How to grow the loan books.

Read the full article:- Mortgage in Spain data improves

January mortgage news is a mixed bag

Mortgage levels for January

Both the INE and the Notary offices published this month the New Year first month data for mortgages in Spain.

Whilst in terms of both numbers of loans and capital lent both reporting bodies were showing a year on year increase for loans registered at land registry in the month the increase over Decembers results were the lowest for a few years.

Wider data

The wider data which is published by the INE and includes matters such as average interest rates and mortgage product types indicated a continuing trend toward fixed rate loans. Whilst the numbers are still very small the last 12 months have seen a shift from around 5% of loans completing on this basis to now just over 10%.

Average loan sizes came under some pressure in the month although overall they continue each month to grow. This coincided with a reported 2% increase in average price per meter square being paid by purchasers owning property in Spain.

Madrid leads the way

Regionally the strongest areas in the month of January were Madrid and Valencia. Some of the coastal and Island regions who had very strong performance through 2015 fell back slightly.
Whether this is a one month blip or a trend toward less mortgage applications from foreign buyers due to uncertainty surrounding the Political arena in Spain will remain to be seen.

Net loan outflows

For Spanish Banks one area of good news was that the gap between the amount of loans they lost due to cancellations or redemptions and the amount of new loans they granted narrowed to less than. 1,000.

Read the full article : - Spanish mortgage data for beginning of year is mixed news

Mortgage application process Spain

When is a mortgage offer not an offer

Whilst the application process for a Mortgage in Spain closely resembles that of other countries the process of pre-approval can be confusing and lacks robustness.

Apart from one lender no Banks in Spain have sophisticated scoring systems that allow them to pre-approve loan by checking key parameters.

Scoring systems

Sabadell Bank who do have a scoring system which allows for quick responses on what it is likely they can offer do not however use this scoring system in the way in which a UK lender might and an applicant used to pre-approvals from other countries should proceed with caution when they are told they are approved and on what basis.

In Spain only fully packaged applications that have been passed to and reviewed by the Risk Teams at either regional or national level are deemed to be fiscally approved. Any other information however official it may appear given at branch level is just an illustration of what could be posible and is not in any way shape or form an approval to lending.

Valuation first

Many Banks in Spain will not pass to their underwriting teams a documented application for fiscal approval until a valuation is paid for and the result is back to be added to the file. This can mean a valuation fee must be paid before an applicant even knows if they are personally approved and meet bank criteria.

Avoid the pitfalls

Most Banks, if you insist on it or are using an experienced broker will provide, without valuation a fully underwritten approval to lend but just because documents have been submitted do not assume it has been seen by Risk. Often branch staff will just review the file and state that they see no problems.

Language barriers and a miss-understandings over how far in the process the application is can cause confusion.

Read the full article :- Applying for a Mortgage in Spain

Loan reporting for Spain 2015 final figures

February mortgage reports

Data published in February from the various reporting bodies in Spain show that both mortgages in Spain and house sales have made a slow but steady recovery during 2015.

The INE who reports on registered Spanish loans and registered transfers of property titles rather than signings showed a higher year on year increase than the Notary offices. This would seem to indicate that signings from the back end of 2014, registered in early 2015, were higher than for the same months in 2015.

2015 results

Overall during the year mortgage capital lent grew by a higher percentage than numbers of new loans granted. The higher increase was due to the average loan size increasing during 2015. Cataluna for example saw growth of over 60% when relating it to capital lent but only a 37% increase in numbers of loans. Madrid on the other hand was the only region who saw a higher level of growth on numbers of loans to capital lent. 

In general coastal areas and those most attractive to foreign buyers saw the best level of growth both in terms of financial facilities and house sales.

Rates and product types

The average rate by which Spanish Mortgages were granted increased for the first time in many months during December despite the Euribor declining  slightly. This may be due to the ongoing trend toward fixed rate product types. Fixed rate best buys may provide a higher immediate rate but will provide good value for money and stability in the medium to longer term.

Net loan outflows

Mortgage in Spain redemptions were 55,000 higher than new loans constituted so net outflows remain the main challenge for Spanish Banks going forward.

Read the full article:- Home loan results for December and 2015 in Spain