More Mortgages Written in January

Despite the number of property sales falling slightly at the start of the year, when compared to last year, the number of new mortgages written in Spain increased in January by over 10% with 23,275 new mortgages recorded.

Also on the increase is the average amount of the mortgages written which increased by 14.2% compared to January 2015, to stand at 133,461 Euros.

The total value of mortgages written on urban properties amounted to 4,229.4 million Euros, representing a 16.3% increase over the previous year. Of those, the amount borrowed against residential property increased by 10.8% to 2,459.7 million Euros. Mortgages on residential properties accounted for 55.3% of capital borrowed in January.

Interest Rates

The majority of new mortgages written in January (89.8%) were variable rate mortgages, compared to only 10.2% on a fixed rate. In 94% of cases interest was based on the Euribor rate which has been consistently low in recent months.

The average rate of interest applied to new mortgages in January was 3.21% with the average term being 22 years. On residential property the average rate was 3.27%, representing a slight fall of 0.4% compared to January 2015.

By Community

Andalucia, Madrid and Catalonia registered the highest amount of new mortgages with 4,684, 3,976 and 3,857 new mortgages, respectively.

By growth, the winning communities were Castilla-La-Mancha which saw a 30.4% increase, followed by Madrid with 22.9% more mortgages and Andalucia with 22.2% more than in January last year.

When comparing communities based on the total amount of borrowed capital Madrid easily dominates with 576.9 million euros lent out during January. Catalonia followed with 457.2 million and Andalucia with 411.8 million Euros.

The largest monthly variation recorded, when compared to the previous month (Dec 2015), was Castilla y León which saw an increase of 53%, while the number of mortgages written in Castilla-La Mancha increased 43.6%.

The only two communities that recorded a fall in the number of mortgages written were Cantabria (-10.9%) and Galicia (-8.0%).

Read the full report here: INE (in Spanish).

 

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Does a Zero Rate Euribor Affect Your Mortgage?

What mortgage should I get with a negative Euribor?

The Euribor has reached zero and continues its downward path, an unusual scenario which causes troubles to banks in an inauspicious time for retail businesses. The variable rate mortgage, with a calculation formula stipulated by adding a spread to Euribor, will experience a surprise in the coming months: the applicable Euribor may have a minus sign in front of it.

What effect would this have on fees? A charge for being mortgaged, a reduction in the monthly payment or no effect at all? If the absolute value of Frozen Euribor overtakes the differential one, the applicable interest rate would be negative, implying getting money for having borrowed, according to the opinion of some. After all, there are banks that pay other financial entities to lend money, and this paradox makes the Euribor and other market interest rates very cold. But the banks have already made clear that to “pay for borrowing” is “contradictory” and that, in any case, the courts are the ones to decide.

Although it might happen that financial institutions have to pay the mortgagor, only a few customers could experience the happiness of actually receiving money. Customers who took Deutsche Bank mortgages, to a spread of 0.17%, or Bankinter, with its extinct Euribor offer of +0.18%, are the type of borrower who might experience the effect of negative rates. Those with ordinary mortgages may opt for a reduced share, with interest below the agreed differential. The effect would be invalid if the writing of a mortgage establishes a floor clause, which immunizes the monthly fee from negative rates. In these cases, consulting a lawyer to analyze if a lawsuit against the bank is viable is a good thing to do.

What if I’m thinking about asking for a mortgage?

The yield curve that benefits many mortgagors may hurt new applicants. 2016 is going to be the year of real estate, but it is going to takeoff gradually. Banks want to attract creditworthy customers and compete in the mortgage market, but this effect may be mitigated if the negative rates scenario continues.

In the first place, the reduction of spreads has stopped, according to data handled by the financial portal iAhorro.com, Euribor + 1 was the one to beat this year, but banks have frozen the lower rate offers. It is not plausible to see lower spread mortgages until the Euribor value rises again, even if only slightly. This is a bad panorama for those who had planned to finance their home when mortgages were cheaper.

In addition, to wait for a rebirth of floor clauses is not unreasonable. The floor clauses are not illegal; what does not comply with the rules is to hide its effects on the calculation of the monthly installments from clients. A “zero clause” agreement has been established which means that the mortgage interest will never descend below zero. It could be only a matter of time before some banks take the leap to provide limitations on the descent of moderate interest rates, not much above 1%.

Banco Santander has innovated and may set a trend: it states that the rate is fixed for the first two years, namely 1.75% nominal. Two years is not a term that seeks to benefit the customer who pays fixed fees, but to protect the bank from a negative Euribor during this time.

But not everything is bad news for those who want to get a mortgage this year: there are several banks offering mortgages with fixed or mixed stable rates below 3% or even 2% depending on the bank and the client. 1.75% for two years is a bad choice; but a safe 2% for ten or more years is an option to take into account. In the mortgage North Pole, those who know how to wrap up with the training and information coat, will arrive safely at their destination: just paying a fair amount for the money borrowed.

 

N.B. This article is for information only and should not be treated as financial advice.

Is a Spanish mortgage a better option?

Having made a decision where you want to call home and also which property to purchase, the following step of purchasing a home is usually how to find the funds to pay for it. For everybody apart from the wealthy, this will likely entail obtaining a mortgage.

spanish_mortgages
It may be worth arranging the mortgage before deciding on a property

Qualification requirements in Spain depend on your own personal capacity to pay back the money you borrow, and could well be stricter compared to your own country. Typically, your overall regular monthly expenses such as repayments must not surpass 35% of the net income. Loan providers may take into account some types of earnings outside your income, for example that from rentals and other investments, however usually in Spain they don’t always take these in to account.

Should you obtain a mortgage from a Spanish loan provider, or perhaps from back home? Benefits of obtaining a mortgage in Spain consist of reasonably low interest payments, much less management complexity and, if you want to rent your home, maintaining all funds in Euros. Nevertheless, looking at Spain’s present financial situation, it might be hard to get a good option.

In addition, mortgage loan products like buy to let and well-known features like reduced fees and penalties with regard to earlier repayment might not be offered. Several non-resident mortgage loans are inelastic and out-of-date and don’t provide the overall flexibility a lot of consumers would like. Additionally, the standard mañana culture may result in lengthy administration times so its worth lookihng in to arranging the mortgage before the search for the property.

This example is slowly improving. Several lending institutions now have awakened to the fact that there are rewards available from the large numbers of non-residents purchasing holiday homes, and now have set up non-resident divisions that will look on foreign loan provider expectations far more sympathetically.

It could take quite a while to get the mortgage you would like – more time if you are not fluent in the local language. Spanish loan companies tend to opt for your main income source to be a regular salary, and could overlook less regular income sources like dividends and also self-employment. Acquiring a mortgage broker could help to ameliorate these kinds of issues.

Mortgage types:-

The repayment mortgage is considered the most typical type in Spain. It’s conditions depend upon whether or not you qualify as a Spanish resident or not. Should you have held a Spanish residence card or perhaps a certificate, and have been paying taxes in Spain for two years or maybe more, you could be entitled to a Spanish Resident mortgage. It has the best loan-to-value ratio (LTV), and also the most favourable rate of interest, which in Spain is linked to the European standard borrowing rate, known as the Euribor.

Click link here to calculate your mortgage  – Mortgage calculator

Mortgage and finance update

IMS - International Mortgage SolutionsThis week has seen a number of mixed messages coming out of Spain.

On a positive note Q2 saw the highest amount of property sales to foreign buyers recorded for 4 years.

On a more negative note,( dependant which side of the fence you are on), house prices continued to drop reaching 2004 levels, with an expectation prices will drop further over the next 12 months. It has always been my personal view that prices would need to drop to 2002 levels before any sort of recovery happened and we are looking very much like we are heading this way.

The Spanish independent Bank audits are due out this week with the Spanish Government stating that the amount of cash required will be in line with the previously expected 60 billion however other sources are rumoring the situation has worsened since the initial figures were published and that the amount of extra capital required could be as high as 120 billion Euros.

The 12 month Euribor for September for mortgage completions and reviews dropped to 0.87% the lowest ever recorded level with all indications suggesting a further drop in October.

Mortgage pricing has remained stable since the last round of increase in margins which took place late July and early August. Average margins above Euribor being granted are around 3.25%.

There has been no visible relaxing of criteria’s by the Banks and in the medium term this is highly unlikely to happen particularly given that part of the deal for releasing emergency capital includes a change to their overall regulation.

The Bank of Spain requirements on due diligence of mortgage applications remains historically high. Paperwork requirements for “ know your client rules” and the level of evidence a Bank must hold on file to justify lending is extreme even for low loan to values. Mortgages are still being granted but applicants can expect to be requested to supply extensive evidence of affordability including what appears to be various duplication in paperwork requirements.

International Mortgage Solutions
www.international-mortgages.org

Average mortgage value down 7.2% in May

Average mortgage value down 7.2%
Average mortgage value down 7.2%

The National Institute of Statistics has released figures showing a fall of 7.2% in the average value of mortgages constituted in May, compared to the same time in 2011.

The average mortgage value in May was 112,320€, a figure 7.2% lower than the same month the previous year and 1.8% lower than that recorded in April 2012.

In the case of mortgages constituted for dwellings, the average amount was 101,168 euros, 7.5% less than in May 2011, and 1.5% higher than that registered in April 2012.

The value of the mortgages constituted on urban properties was 4,550 million euros in May, indicating an interannual decrease of 33.5%. In dwellings, the capital loaned exceeded 2,631 million euros, 35.8% less.

Mortgages by institution

Banks were the institutions that granted the largest number of mortgage loans in May (73.8% of the total), followed by Savings Banks (10.2%) and Other financial institutions (16.0%).

Regarding the capital loaned, Banks granted 71.5% of the total, Savings Banks 10.8%, and Other financial institutions 17.7%.

Mortgage interest rates

The average interest rate in May 2012 was 4.32%, indicating a 5.9% increase in the interannual rate, and a 1.4% decrease as compared with April 2012.

By institution, the average interest rate of Savings Bank mortgage loans was 4.36%, and the average term was 23 years. Regarding Banks, the average interest rate for mortgage loans was 4.47%, and the average term was 20 years.

94.4% of the mortgages constituted in May used a variable interest rate, as opposed to the 5.6% that used a fixed rate. Within the variables, the Euribor was the reference interest rate most used in constituting mortgages, specifically in 85.3% of new contracts.

Mortgages with registration changes

In May, the total number of mortgages with changes in their conditions recorded in the land registries stood at 32,819, with an interannual increase of 5.8%. For housing, the number of mortgages with modified conditions increased 7.8%.

Considering the type of modification of the conditions, in May 28,158 novations (or modifications produced within the same financial institution) were produced, for an interannual increase of 8.0%. The number of transactions that changed institutions (subrogations creditor) was 3,331, that is 4.1% less, as compared with May 2011. In turn, 1,330 mortgages changed the holder of the mortgaged property (subrogations debtor), which implied an interannual decrease of 10.6%.

Number of mortgages with changes in interest rate conditions

Of the 32,819 mortgages with changes in their conditions recorded in the land registries in May, 37.3% were due to changes in interest rates.

The percentage of mortgages at a fixed interest rate decreased after the change in conditions (from 3.3% to 2.3% of the total), since most of these loans were referenced to a variable interest rate. Within the interest rate structure, the Euribor was the main reference. The lowest average interest before and after the change was that corresponding to Other interest rates.

After the modification of conditions, the average interest of the loans increased 1.09 points in fixed interest rate mortgages, and decreased 0.16 points in variable interest rate mortgages.

Registered mortgage cancellations

In May, 39,788 mortgage cancellations were registered, 9.1% less than in the same month of 2011. Mortgages cancelled on rustic properties decreased 11.5%, whilst those cancelled on urban properties decreased 9.0%. Cancellations of mortgages on dwellings decreased 10.1% in the interannual rate.

Download complete report from INE: Mortgage Statistics – May 2012

Mortgage borrowing falls in April

Fewer mortgages granted in April
Fewer mortgages granted in April

Following falling property sales the number of new mortgages approved in April fell by 7.5% compared to the same month in 2011.

A total of 977.061 million euros of new mortgage loans were approved compared to 1.056.325 million euros in April of the previous year.

The Spanish Mortgage Association released the figures which confirm April as a slow month with property transfers also falling 5.7%.

The month closed with the total mortgage balance down on the previous month by 8.780 million euros, 20.000 million euros less than in February. The year-on-year balance dropped by 73.264 million euros, putting the total balance at 966.514 million euros which  includes a figure of 176.058 million euros in securitised mortgage assets.

Banks and savings banks accounted for 887.416 million euros of the total while credit unions recorded 65.409 million euros representing a 4.95% fall for them. However, it wasn’t bad news for all with credit institutions accounting for 13.689 million euros representing a massive year-on-year growth of 35%.

The figures show with some clarity the continued slowdown of the country’s real-estate sector which has been suffering since the property bubble burst in 2007, when property prices were at their peak and property sales figures also hit record levels.

You can see the report here: Mortgage Credit Activity April 2012

Spanish Mortgage News

IMS - International Mortgage SolutionsData issued recently confirms the situation on lending in Spain continues to be depressed.

Whilst Spanish Banks were the biggest up takers  of the European Central Banks cheap bonds issued over the last few months this money was predominately used to buy sovereign debt rather than to ease the credit squeeze.

Mortgage lending in Feb 2012 was down 9.4% from the previous month and 47.1% down from the same time the previous year.

Interest rates were up by 17.3% at an average granted rate of 4.54%.

All Banks plan to contract their lending books this year as they struggle to meet new balance sheet and provisioning stipulations introduced by the government.

IMS an independent broker based in Spain says unlike the national data our completions for the year on year February 2011 versus 2012 are up 28%.

Average granted rates were just over 4%.

It is still possible to obtain rates from 3.29% at the lower end subject to loan to values levels and linked products taken.

Heather from IMS said “The Spanish Banks do remain cautious but with the right support, this does not always impact on lending volumes.”

International Mortgage Solutions
www.international-mortgages.org

Average mortgage down 12.5% in February

INEFigures released by the National Statistics Institute (INE) show a drop in the average value of mortgages in Spain in February with a decrease of 12.5%, compared to the same period in 2011.

However, there was an increase of 4.8% in the number of existing mortgages that changed conditions, while the number of cancelled mortgages decreased 12.7%.

During the month of February, the average amount of mortgage constitutions recorded in the land registries stood at 112,179 euros, a figure 12.5% lower than the same month the previous year and 8.8% lower than that recorded in January 2012.

In the case of mortgages constituted for dwellings, the average amount was 104,868 euros, 14.6% less than in February 2011, and 2.2% less than that registered in January 2012.

The value of the mortgages constituted on urban properties was 4,615 million euros in February, indicating an interannual decrease of 50.1%. In dwellings, the capital loaned exceeded 2,770 million euros, 54.8% less.

Mortgages by institution  

Banks were the institutions that granted the largest number of mortgage loans in February (66.0% of the total), followed by Savings Banks (16.7%) and Other financial institutions (17.3%).

Regarding the capital loaned, Banks granted 66.3% of the total, Savings Banks 17.5%, and other financial institutions 16.2%.

Mortgage interest rates

The average interest rate in February 2012 was 4.35%, indicating a 17.3% increase in the interannual rate, and a decrease of 1.6% as compared with January 2012.

By institution, the average interest rate of Savings Bank mortgage loans was 4.23%, and the average term was 23 years. Regarding Banks, the average interest rate for mortgage loans was 4.54%, and the average term was 21 years.

94.2% of the mortgages constituted in February used a variable interest rate, as opposed to the 5.8% that used a fixed rate. Within the variables, the Euribor was the reference interest rate most used in constituting mortgages, specifically in 86.5% of new contracts.

Mortgages with registration changes

In February, the total number of mortgages with changes in their conditions recorded in the land registries stood at 32,588, with an interannual increase of 4.8%. For housing, the number of mortgages with modified conditions decreased 6.9%.

Considering the type of modification of the conditions, in February 26,428 novations (or modifications produced within the same financial institution) were produced, for an interannual increase of 2.8%. The number of transactions that changed institutions (subrogations creditor) was 4,516, that is 20.8% more. In turn, 1,644 mortgages changed the holder of the mortgaged property (subrogations debtor), which implied an increase of 0.7%.

Number of mortgages with changes in interest rate conditions 

Of the 32,588 mortgages with changes in their conditions recorded in the land registries in February, 24.9% were due to changes in interest rates.

The percentage of mortgages at a fixed interest rate decreased after the change in conditions (from 9.3% to 4.1% of the total), since most of these loans were referenced to a variable interest rate. Within the interest rate structure, the Euribor was the main reference. The lowest average interest before the change was that corresponding to MRTI of Banks (4.44%) and after the change was Other Interest rates (3.72%).

After the modification of conditions, the average interest of the loans decreased 0.97 points in fixed interest rate mortgages, and decreased 0.71 points in variable interest rate mortgages.

Registered mortgage cancellations 

In February, 40,658 mortgage cancellations were registered, 12.7% less than in the same month of 2011. Mortgages cancelled on rustic properties increased 9.6%, whilst those cancelled on urban properties decreased 13.4%. Cancellations of mortgages on dwellings decreased 16.6% in the interannual rate.

Geographical distribution

The highest numbers of mortgaged properties per 100,000 inhabitants¹ was in Illes Balears (169). There is no community that presented a positive variation rate. The greatest negative variation rates was registered in La Rioja (-70.8%).

Pais Vasco registered the highest average mortgaged amount (169,482). The Autonomous Community presenting the highest positive variation rates was Cantabria (26.4%).

The Communities showing the highest number of properties with modified conditions in February per 100,000 inhabitants¹ were Comunitat Valenciana (156) and Castilla-La Mancha (132). Those having the greatest number of registered mortgage cancellations per 100,000 inhabitants¹ were La Rioja (184), and Comunitat Valenciana (156).

¹ This data was calculated from the revision of the figures of the Municipal Register for the year 2011. Only the population aged 18 to 84 years old was considered.

You can read the full press release here: Mortgage Statistics – February 2012

Spanish Mortgage Update – April 2012

The early months of 2012 has seen little by way of good news on both the purchase and mortgage side in Spain.

For the second quarter margins above Euribor which have seen increases across the board early in the New Year do at least seem to have stabilized. No Bank has increased its margins since the cheap ECB funds were made available. Euribor itself has dropped to 1.49% for April making average overall rates in the region of 4.5%.

Mortgages are still available and for some Banks their focus is now on the nonresident market as for the first time in history non residents are seen as a lower risk than residents.

Under pressure from the Government and following changes in legislation Banks are now being forced to more accurately assess the value of stock on their balance sheet and we have started to see much more realistic pricing of Bank stock.

Most Banks have stated over the last few days that they have budgeted to sell double the number of properties in 2012 in comparison to 2011 and discounts and special mortgage terms will reflect this. Whilst this may not be good news for private sellers as the Bank are the agent and the supplier of the funds, recovery will only happen fully when the Banks have shed their surplus stock.

Whilst possibly painful this process must take place before both the mortgage market and the property market can start to move forward.

Buyers considering buying bank stock with a mortgage from the Bank should always ensure they still obtain independent advice for both finance and legalities buying from a Bank does not mean you can assume everything is in order.

International Mortgage Solutions
www.international-mortgages.org

Mortgage Statistics – January 2012

According to figures released by The National Statistics Institute (INE), during the month of January, the average value of the mortgage constitutions recorded in the land registries stood at 122,973 euros, a 5.0% increase compared to the same month in 2011, and 10.6% higher than that recorded in December 2011.

In the case of mortgages constituted for dwellings, the average value was 107,217  euros, 9.7% less than in January 2011, and 3.2% higher than that registered in December  2011.

The value of the mortgages constituted on urban properties stood at 5,308 million euros in January, indicating an interannual decrease of 35.3%. In dwellings, the capital loaned  exceeded 3,127 million euros, 46.9% less.

Mortgages by institution

Banks were the institutions that granted the highest number of mortgage loans in January (64.7% of the total), followed by Savings Banks (18.9%) and Other financial institutions  (16.4%).

Regarding the capital loaned, Banks granted 67.6% of the total, Savings Banks 18.2%, and Other financial institutions 14.2%.

Mortgage interest rates

The average interest rate in January 2012 was 4.42%, indicating a 19.1% increase in the interannual rate, and an increase of 1.6%, as compared with December 2011.

By institution, the average interest rate of Savings Bank mortgage loans was 4.37%, and the average term was 23 years. Regarding Banks, the average interest rate for mortgage loans was 4.55%, and the average term was 21 years.

92.8% of the mortgages constituted in January used a variable interest rate, as opposed to the 7.2% that used a fixed rate. Within the variable rates, the Euribor was the reference interest rate most used in constituting mortgages, specifically in 87.8% of new contracts.

Mortgages with registration changes

In January, the total number of mortgages with changes in their conditions recorded in the land registries stood at 30,571, with an interannual decrease of 6.6%. In the case of dwellings, the number of mortgages with modified conditions decreased 9.0%.

Considering the type of modification to conditions, in January, 25,409 novations (or modifications produced within the same financial institution) took place, for an interannual decrease of 2.6%. The number of transactions that changed institutions (subrogations creditor) was 3,487, 28.2% less. In turn, 1,675 mortgages changed the holder of the mortgaged property (subrogations debtor), which implied a decrease of 6.2%.

Number of mortgages with changes in interest rate conditions

Of the 30,571 mortgages with changes in their conditions recorded in the land registries in January, 40.6% were due to changes in interest rates.

The percentage of mortgages at a fixed interest rate decreased after the change in conditions (from 4.1% to 2.7% of the total), since most of these loans were referenced to a variable interest rate. Within the interest rate structure, the Euribor was the main reference. The lowest average interest before the change was that corresponding to Other interest rates (3.90%). The lowest average interest after the change was that corresponding to the Euribor (4.36%).

After the modification to conditions, the average interest of the loans decreased 0.19 points in fixed interest rate mortgages, and decreased 0.10 points in variable interest rate mortgages.

Registered mortgage cancellations

In January, 40,515 mortgage cancellations were registered, 7.5% less than in the same month of 2011. Mortgages cancelled on rustic properties increased 11.4%, and those cancelled on urban properties dropped 8.1%. Registered cancellations of mortgages on dwellings decreased 9.9% in the interannual rate.

Geographical distribution

The highest number of mortgaged properties per 100,000 inhabitants was recorded in La Rioja (224). There is no community that presented a positive variation rate. The greatest negative variation rates were registered in Aragon (-61.0%) and Galicia (–49.2%).

Comunidad de Madrid registered the highest average amount mortgaged (169,892 euros). Andalucia presented the highest positive interannual variation rate (30.0%).

The Communities showing the highest numbers of properties with modified conditions per 100,000 inhabitants were Castilla-La Mancha (145) and Comunitat Valenciana (134). Those having the greatest number of registered mortgage cancellations per 100,000 inhabitants were La Rioja (320) and Cantabria (162).

You can download the complete report here: Mortgage Statistics – January 2012