Mortgages in Spain numbers drop in February

Spanish loans

In February the number of Mortgages in Spain registered at land registry and new loans signed in the month dropped in comparison to January.

Capital lent increased however due to a higher average loan size.

Whilst normal for Februarys home loans to decrease against January the drop in numbers was the largest percentage drop for the last 5 years.

House loans

The amount of new credit in the market that related to the purchase of a house also dropped in February.

Fixed rate versus variable rates

Fixed rate loans continued to grow, taking a share of 38% of all new loans, the fixed rate interest level was less than the previous year but overall rates increased marginally.

Brexit causes uncertainty

Coastal areas saw the biggest drop month on month for new loans perhaps under pressure from uncertainty of non resident buyers who mainly come from the UK.

Regionally across the first two months of 2017 against 2016 most regions are still showing an annual increase.

Mortgage book losses decrease

Spanish Banks saw a net loss to their mortgage books for the month after January where there was a small gain but the loss has slowed considerably.

Read the full article :- Numbers of Spanish loans drop in February

2017 January Spanish lending grows

The first month of the new year saw positive growth in Spain for new lending contracted.

Loan levels increase

Across the board all regions increased year on year and month on month in terms of numbers of loans and capital lent.

Spanish Banks will be happy to see that for only the second time in many years the amount of newMortgages in Spain taken was greater than the amount of loans cancelled.

Fixed rate products

Fixed rates continued to grow as the choice of borrowers and now makes up well over 30% of all Mortgages in Spain completed within the month.

A wide range of fixed rates are now available from most lenders with fixed rate terms ranging from 5 years to 30 years. Due to a lack of re-mortgage facilities in Spain and the high costs of taking a loan to a new lender, fixed rates are a very viable option for borrowers.

Spanish Banks have very keen pricing on their fixed rates products and whilst still above the variable rate options due to the low Euribor, they appear to provide a very good medium to long term option.

Best performer the Balearics

Regionally all regions performed above December of 2016 and January 2016. the Balearics had the highest percentage increases and the Canaries the lowest.

Read the full article :- Positive start for 2017 for loans in Spain

2016 mortgage market overview

Spanish lending performance in December.

December saw a mixed month of mortgages in Spain with most regions showing numbers below those of November but all increasing year on year.

Average loan sizes rose in December so despite the drop in numbers the actual capital lent did not fall so heavily.

Full year results

Across the whole year, now the full 12 month completions data is available, Spanish lending saw it best year since 2012.

Total numbers of new loans and capital lent grew in all regions over 2015 although the pace of growth was a little behind 2015 to 2014 levels.

Fixed rate growth

2016 saw the mix of variable rate product types drop and fixed rate product types grow dramatically. All Banks in Spain launched fixed rate products and the share of the total new lending market grew from around 5% to over 30% in 12 months.

Net outflows continued to be a problem with over 28,000 more loans being redeemed than new loans being constituted. This has now been the case for every year since the banking crisis.

Brexit impact

Brexit hit non resident loan levels for a couple of months but UK applications have increased for the first two months of 2017. Whether the triggering of Article 50 pushes this backwards will be clear over the next few weeks.

Read the full article:- 2016 mortgage market in Spain

Lending in Spain increases

Spanish mortgage lending

Lending in Spain increased in November over both the previous year and the previous month.

The average loan size dropped month on month but higher volumes up over 32% meant capital lent was higher.

Lending activity

Activity for the year in most regions has increased in 2016 over 2015 and this should remain the case as the year end reporting comes in next month.

Interest rates

Fixed rates have been the main story of the year and the percentage of loans that completed with this mortgage product type hit 31.8% of all lending in November.

Average interest rates rose but very slightly and have been stable all year.

Challenges for the Spanish lenders

Spanish Banks will pleased with the increase in  volume although it will fall behind their target levels. The biggest pressure for the lenders has been that numbers of loans cancelling within year have continued to outstrip new loans constituted.

Read the full article:- Loans in Spain increase year on year

2017 loan outlook Spain

What happened in 2016

2016 was a year of little change for Spanish mortgage applicants abut major market changes for the Banks.

Spanish Banks had a number of challenges thrown at them during the last 12 months.

Market conditions affecting lending

These included a number of factors. Firstly the Banks lost their case on floor rates meaning they had to remove them from new and existing contracts and compensate borrowers who had paid more interest than if the floor rate had not been in place.

Secondly Brexit hit hard both the non resident buying market and the cost of buying in Spain as sterling was hit hard.

For a short period this currency fluctuation brought in new business as cash buyers sought to gain a loan but long term the drop in sterling will affect the buying market in total.

No cohesive Government in Spain after the July elections held back the housing market as Spanish buyers held off on high ticket items such as a home until the political landscape and taxation levels became more stable.

December court case lost

In December the Banks lost another court case on the normal practice of passing on the registration costs of both purchase and mortgage deeds to the borrower. The implications of this in the current low margin lending market have yet to unfold.

Cost of funds started to increase and fixed rate product types which saw very low interest rates halfway through the year started to climb and will continue to do so through the first few months of 2017.

Will risk assessment be relaxed

The only areas the Banks still have control over are risk criterias and flexibility of product types. If they are to meet the loan targets they want in 2017 the Banks are going to have to look closely at what in this challenging market allows them to increase profitability without losing volume or market share.

Read the full article :- Spanish lending news and views for 2017

October loans in Spain

Levels of lending in Spain during October

Levels of borrowing in Spain fell from the previous month of September but remained up on the same month of 2015.

This data is in line with normal market trends where only once in the last 5 years have Spanish Banks increased their completions in October over September.

Average loan amounts

Average house prices nationally continue to fall and this is reflected in the average loan size. Regionally the fall in house price and loan size is not across the board with certain hotspots seeing increases.

October was a bad month for levels of loan registered within most of the traditional holiday home regions this may be due to UK buyers holding off somewhat until the impact of Brexit is known.

Product types and interest rates

Mortgages in Spain completed with a slightly lower percentage being contracted on a fixed rate product type basis and interest rates rose very slightly.

Best buys in terms of fixed rates are not now as competitive as they were as cost of funds have risen in the market.

Loan cancellations

Loan cancellations which were below new borrowings in September increased again in October giving a negative outflow for Spanish Lenders.

Based on completions our prediction is that lending levels will be buoyant for the last two months of the year.

Read the full article:- October Mortgage completions in Spain

Spanish lending during 2016

The last 12 Months

2016 has seen a number of changes in the Spanish mortgage market. Outside pressures like Brexit have affected the buying and mortgage application market with UK buyers being the largest population of non residents in Spain.

FX rate fluctuations

Foreign exchange rate fluctuations have been vast during the year rising as high as 1.42 and dropping within weeks to 1.10. For those buyers outside the Euro this has a massive affect on the price being paid and has pushed some cash buyers towards taking lending in Spain until the pound recovers.

Fixed rates

The biggest change in the loan arena in Spain is the rise of fixed rates. From almost a total variable rate market fixed rates now make up over 20% of all loan completions each month.

Spanish Banks now hold a range of full term fixed products ranging from 5 years to 30 years.

Risk

The Bank of Spain has sought during the year to keep lending under control and the Risk teams within the Spanish Banks have not thrown caution to the wind. The outcome is another year of net losses to the mortgage book and a year of missed targets.

Compulsory products the surge of Spanish lending remains a key issue for mortgage applicants but very competitive fixed rates have helped overcome this.

Read the full article :- 2016 Spanish loan overview