Average mortgage value fell 10.5% in July

According to figures from the National Institute of Statistics (INE), the average value of mortgages  for homes approved in July fell 10.5% to an average of 98,892€, compared to July 2011.

Overall, the average value of all mortgages constituted in Spain during July decreased 19.4% in the inter-annual rate with the average falling to 99,157€.

The main points of the press release are below.

During the month of July, the average amount of mortgage constitutions recorded in the land registries stood at 99,157 euros, a figure 19.4% lower than the same month the previous year and 19.0% lower than that recorded in June 2012.

In the case of mortgages constituted for dwellings, the average amount was 98,892 euros, 10.5% less than in July 2011, and 8.0% lower than that registered in June 2012.

The value of the mortgages constituted on urban properties was 3,858 million euros in July, indicating an interannual decrease of 28.9%. In dwellings, the capital loaned exceeded 2,402 million euros, 26.2% less.

Mortgages by institution

Banks were the institutions that granted the largest number of mortgage loans in July (74.3% of the total), followed by Savings Banks (10.2%) and Other financial institutions (15.5%).

Regarding the capital loaned, Banks granted 71.9% of the total, Savings Banks 11.1%, and Other financial institutions 17.0%.

Mortgage interest rates

The average interest rate for the total of mortgage loans was 4.27%, indicating a 0.2% less than July 2011. Regarding dwellings, the average interest rate was 4.24%, representing an annual variation of 1.8%.

By institution, the average interest rate of Savings Bank mortgage loans was 4.34%, and the average term was 22 years. Regarding Banks, the average interest rate for mortgage loans was 4.38%, and the average term was 21 years.

92.1% of the mortgages constituted in July used a variable interest rate, as opposed to the 7.9% that used a fixed rate. The Euribor was the reference interest rate most used in constituting mortgages, specifically in 85.4% of new contracts.

You can download the full press release here: Mortgage Statistics – July 2012

Statistics on transfer of property rights – July 2012.

In July, the number of property transfers registered at notary was 133,144 which represent a 3.9% increase over the same period last year.

This is according to figures released by the National Institute of Statistics which also showed that the number of homes transferred in July was 2.5% lower than in the same month last year.

The press release is below.

The number of property transfers recorded in the land registries, from public deeds previously registered, was 133,144 in July, that is, 3.9% more than for the same month in 2011, and 2.2% higher than in June 2012.

In the case of registered merchantings of property, the number of transfers was 57,344, representing an interannual decrease of 0.6%, and an increase of 5.3%, as compared with the previous month.

Merchantings recorded in the land registries

86.5% of the registered merchantings corresponded to urban properties and 13.5% to rustic properties. Among the urban properties, 55.2% were merchantings of dwellings.

The number of merchantings of rustic properties increased 1.2% in the interannual rate in July, while that of urban properties decreased 0.8%. Within the latter, merchantings of dwellings decreased 2.5%.

Registered merchantings of dwellings, by protection system and status

87.6% of transfers of dwellings by merchanting in July were free housing, and 12.4% were protected housing. In interannual terms, the number of transfers of free dwellings by merchanting decreased 2.5%, the same figure than protected housing.

48.5% of the dwellings transferred by merchanting in July were new, and 51.5% were used. The number of transactions on new dwellings decreased 0.2% and the number of used dwellings decreased 4.6%, as compared with July 2011.

You can download the full press release here: Statistics on Transfer of Property Rights – July 2012

July Consumer Price Index stands at 2.2%

INEThe annual change of the CPI for the month of July stands at 2.2%, three tenths above the change registered the previous month.

This is according to figures released by the National Institute of Statistics who summarise the main points as follows:

  • The annual change of core inflation increases one tenth, standing at 1.4%.
  • Monthly change of the overall index is –0.2%.
  • The Harmonised Index of Consumer Prices (HICP) annual change stands at 2.2%, four tenths higher than that registered in June.

Annual evolution of consumer prices 

The annual change for the overall Consumer Price Index (CPI) in July was 2.2% three tenths higher than that registered in June. This change was the same than the CPI flash estimate, published last 30 July.

The groups that most contributed positively in this rate were:

• Medicine, with an annual change of 6.6%, almost ten points higher than the previous month, mainly due to the variation in the rubric of medical and other pharmaceutical products, as a result of changes on its specific legislation of financing.

• Transport, whose annual variation increased nine tenths and stood at 3.8%, mainly due to the increase in prices of fuels and lubricants, and less in air transport, more acute this month than July 2011.

• Housing, with an annual change of 5.4%, four tenths higher than the previous month, mainly due to the increase in prices of electricity. Besides this increase, worth noting the drop on the annual change of gas, whose prices increased more in 2011 than this month.

Although there was an increase to the annual change of the CPI, it’s worth noting the decrease in prices in the following groups:

• Food and non-alcoholic beverages, that presented an annual variation of 1.8%, four tenths lower than the previous month. In this behaviour, worth noting the decrease in prices of fresh vegetables and poultry meat. Besides the decreases, highlight the increase in price of fresh potatoes and potatoes preparations, as compared with the decrease registered in July 2011.

• Alcoholic beverages and tobacco, with an annual change of 9.5%, two points lower than the previous month, mainly due to the increase in prices of tobacco was lower this month than the previous year.

Monthly evolution of consumer prices

In July, the monthly change of the overall CPI was –0.2%.

The groups with the greatest negative monthly contribution to the overall index were the following:

• Clothing and footwear, whose monthly change of –12.2%, covering the effects of the drops in prices prior to the summer sales campaign. Its contribution to the overall CPI was -0.980.

• Furnishings, household equipment and routine maintenance of the house, that presented a monthly change of –1.1% and a contribution of –0.073, mainly due to the drop in prices of household textiles articles and furniture.

You can download the complete press release here: Consumer Price Index (CPI) – July 2012

Spanish property prices decline 11.2%

Property prices continue to fall
Property prices continue to fall

Figures released today by Tinsa show property prices in Spain are continuing to fall registering a decline of 11.2% since July 2011.

The IMIE General index registered a year-on-year decline of 11.2% in July, pushing the index down to 1577 points. The cumulative decline in house prices since the market peaked in December 2007 is 31%.

Comparing the regions, the “Balearic Islands and Canary Islands” showed the sharpest year-on-year decline in July, at 14%, closely followed by “Capitals and Large Cities”, which fell by 11.8% compared to the same month the previous year, and “Metropolitan Areas”, which again stood at 11.6%. The decline was greater than the market average in all three areas.

On this occasion, both the “Mediterranean Coast”, with a year-on-year decline of 11%, and lastly, “Other Municipalities” with a fall of 9.1%, were below average.

In terms of the cumulative decline in house prices by region since peak prices, there was a 37.2% fall in July for the “Mediterranean Coast”; followed by 33.5% for “Capitals and Major Cities”, 32.1% for “Metropolitan Areas”, 29.2% for the “Balearic and Canary Islands” and 25.9% for “Other Municipalities”, which comprises the remainder.

You can download the press release here: Tinsa IMIE Index – July 2012

Germany backs Spain’s austerity measures

Wolfgang Schäuble - supports Spain's efforts
Wolfgang Schäuble – supports Spain’s efforts

Germany has lent it’s support to Spain’s reforms and austerity measures saying it is heading in the right direction, despite record borrowing costs, high unemployment, protests and spending cuts.

Following a meeting in Berlin the German finance minister, Wolfgang Schäuble, and the Spanish economy minister, Luis de Guindos, released a joint statement condemning the high interest rates being demanded for the sale of Spanish bonds as they failed to reflect “the fundamentals of the Spanish economy, its growth potential and the sustainability of its public debt”.

Despite this no new measures have been announced to stem the rise in borrowing costs or to prevent possible contagion to other eurozone members.

Both ministers commented that the €100 billion package intended to recapitalise Spain’s struggling banks was an important part of overcoming the confidence crisis in Spain, and across the eurozone. They said “decisive, swift and full implementation” of the plan was essential to restore confidence in Spain’s banking sector.

The ministers had praise for the incorporation of a “balanced budget rule” in the Spanish constitution, saying that it would contribute to “sustainable fiscal consolidation of the regions”.

While the meeting was taking place Spain was paying the second highest interest rate on short-term debt since the birth of the euro.

Also on Tuesday, ratings and research agency Moody’s changed the outlook on EU’s temporary bailout fund, the European Financial Stability Facility, to negative.

They can’t always get what they want

It seems to me that whilst The Rolling Stones are getting satisfaction after 50 years of hard slog, Eurozone ministers are finding after a considerably less period of time “they can’t always get what they want” and the crisis rumbles on.

With the recently discussed bailout for Spain of around 100 billion euros and the immediately agreed 30 billion euros to help restore confidence in the Spanish banking system hopes were strong for the euro. However as we know nothing is free in life and Spain has had to reassure the EU that they can raise additional revenue so they increased VAT from 18% to 21% and of course further spending cuts are on the cards. With long term bond yields suffering in both Spain and Italy and the threat of Greece seeking new terms for their bailout confidence unfortunately in the zone is at the moment very low.

The UK cannot escape concern particularly with the LIBOR scandal still ongoing and the launch of the Funding for banks, it now remains to be seen if the banks will pass on this money to its clients and in doing so at what rate! One piece of good news for the UK however was the UK trade balance was lifted by exports and the trade deficit fell for the first time in 4 months.

The rest of the world also has many concerns, pace of growth in China and lets not forget the US where weaker global growth is starting to take its toll, watch out this week for results from many of the multi nationals, poor results could open up a can of worms.


Moneycorp – costadelsol@moneycorp.com or telephone +34 951 319 700

Government proposes longer opening hours in major tourist areas

Many Spaniards still enjoy an afternoon nap
Many Spaniards still enjoy an afternoon nap

The Spanish Government is to propose amending the law on opening hours (1/2004) in order to oblige tourist cities to fully liberalise opening times in the areas with greatest numbers of visitors, and is also to propose to the regions that, from 2013, the minimum number of Sundays and holidays where businesses can open to trade, be raised from eight to 10.

Secretary of State for Trade, Jaime García-Legaz, explained that to define which cities these changes shall apply to, they have established objective criteria, such as that in the last year they have registered over one million overnight stays in their city, or they have received 400,000 visitors who arrived via cruise ships.

Currently meeting these criteria are Barcelona, Alicante, Valencia, Zaragoza, Malaga, Seville, Las Palmas de Gran Canaria, Bilbao, Cordoba, Granada and Cartagena (Murcia), as well as Madrid, Palma de Mallorca and Santa Cruz de Tenerife, although the latter three are already permitted to open freely to trade in certain tourist areas.

The Government’s proposal includes unifying criteria to establish a timetable of opening hours in all the communities. In addition, they propose increasing the number of hours per week a shop can open (weekdays) from 72 to 90, and to relax the timetables of all establishments with less than 300 square metres, compared to the 150 metres limit set in some regions.

El Mundo reported that within six months from the entry into force of the new regulations, the municipalities of the 11 remaining cities will have to define what they consider to be their areas with the greatest tourist inflows, and the proposal must then be approved by the corresponding regional authority.

“Spain is one of the most restrictive countries when it comes to open hours on holidays, which puts us at a disadvantage,” insisted Garcia-Legaz, who then said that these measures are intended to prevent the millions of visitors who come to Spain, from leaving the country without being able to buy anything because they find the shops are closed.

The Government also showed the regions an example of the declaration statement, prepared together with the Spanish Federation of Municipalities and Provinces, which will allow certain stores to open without a municipal license. This will enable the “Auto-Licence Express” to be launched with immediate effect.

Article Source: Kyero.com

Bailout good for banks, not for borrowers

IMS - International Mortgage SolutionsIt was announced this week that the final details of the package for Spanish banks will be delayed from the 9th of July to the 20th July.

Any misinterpretation by the public that this rescue package would ensure credit started to flow again in Spain was quickly quashed  by bank leaders like the Chief Executive of Sabadell group who stated the banks who require aid, which is most of them, will find it more difficult to lend rather than the other way round.

BBVA Chief Executive also went to press this week stating that BBVA had no intention of reducing the price of the vast assets they hold to sell them through but would in fact hold on to them until prices increased. For BBVA it could be argued this is an option given their size and overall balance sheet strength but for other lenders it will not be. BBVA will find prices drop further because of what other banks have to do so how long they can hold out without being realistic remains to be seen. Brave words that I doubt he will finally be able to stick by.

On the ground mortgages still remain available for purchasers with average rates now 3% to 3.5% above 12 month Euribor with the Euribor dropping slightly again this month from 1.26% to 1.21% for completions in July.

Average rates for those buying bank owned stock are between 1.5% to 2% but often at the cost of negotiated purchase price.

International Mortgage Solutions

Mortgage rates increase

IMS - International Mortgage SolutionsHaving written last week that despite the Bank bailout request from Spanish Government, and continuing lack of access to money markets for all Spanish Banks that we had not seen any price increases, this week most Banks announced just that.

Sol Bank has added a further 0.90% to their margin and have implemented a high first year premium rate of 4.85%. O the positive side they have maintained their 70% product.

Deutsche Bank has announced there will be pricing increases which will be implemented from the 31st of July but the details have not yet been issued.

A number of Banks have indicated they are also reviewing their pricing after this week’s downgrade of 28 entities by Moody’s and we expect these to start being implemented shortly.

Whilst the issues in Spain are well reported,  in general across Europe, including the UK, it is widely reported that mortgage rates will rise as all Banks are suffering from a higher cost of funding which eventually has to be passed onto the consumer.

Spain’s rates rises are unlikely to be the increases new borrowers will feel the impact of in July.

International Mortgage Solutions

Spanish bank audit

IMS - International Mortgage SolutionsThe audit undertaken by an outside company at the expense of € 2m Euros has stated the Banks in Spain in the event of a worsening economic situation would require € 62bn in support.

This is based on a further downturn of the property market equivalent this year to a drop of 19% in values.

What this audit has not done is assess whether the value of current assets held on the books of the Spanish Banks is actually realistic already. There is a big difference between what is required if prices drop further based on realistic values now, and what would be needed if prices drop further and the assets are already overstated.

The markets will sadly work this out for themselves so it will be unrealistic to expect the issuing of this data will have any positive medium term affect on cost of funds and generate a general increase in confidence levels. This will only come after the findings of the more detailed audit due out on the 31st July.

The positives relating to what is happening is that, come what may, at some point this year the Banks will have to make positive moves to start to sell their stock at very realistic prices and deal with the problems, something they have all resisted until now.

The press comment on Spain continues to paint a bleaker picture than those of us on the ground see and the biggest danger is this becomes self perpetuating. Whilst the market is not at the level where serious investors should consider buying (we are some way away from the quick buck scenario) there are bargains out there for those buyers keen to make a life style purchase.

Banks despite all the bad news are in general still lending whilst a few Banks have withdrawn either openly or behind the scenes from lending, equally many have not.

As yet we have seen no increases in the margins being charged over and above those implemented across the board at the beginning of the year.

International Mortgage Solutions