2015 Saw Large Increase in Mortgage Lending

As buyer confidence increases in the Spanish property market, so too does the confidence of banks to lend, although they are still a way off the amounts loaned in 2011 which was followed by two years of decline. In 2014 we saw a slight increase in lending.

In 2015 the total number of mortgages approved for homes was 244,827, a massive increase of 19.8% over 2014. The total number of approved mortgages was 369,588. When looking at the types of properties being mortgaged there is an increase in numbers across the board:

  • 18,566 Rustic Properties (4.7% increase)
  • 351,022 Urban Properties (17.9% increase)
  • 244,827 Dwellings (19.8% increase)

Following a few tumultuous years in the mortgage world it seems the banks have now normalised their reserves and are once again ready to lend although the average amount mortgaged has dropped slightly sitting at €129,214 (-0.8%).

In general, the total amount loaned throughout 2014 increased by 16.2% to a massive 47,756 million Euros.

New mortgages 2015

By Region

As mentioned in a previous article, Spanish property sales are on the up and this is reflected in the number of new mortgages with the same regions topping the charts.

Andalucia saw the most new mortgage approvals in 2015 registering 45,971 of the total, an increase of 20.4%. Madrid and Cataluña followed close behind with 42,382 (19.6% increase) and 38,583 (25.9% increase), respectively.

In terms of percentage increase, the Balearic Islands topped the list with a massive 41.4% increase in mortgage approvals despite only 8,300 new loans.

The only autonomous region to record a drop was the tiny Spanish enclave of Ceuta on Africas North coast, registering -11.6%.


Mortgage Foreclosures Down in 2011

According to the Spanish Mortgage Association (AHE), 6.63% of unemployed workers have been affected by mortgage foreclosure proceedings since the beginning of the crisis up to the end of 2011.

The number of affected unemployed more than doubles the total percentage of households involved in foreclosures in this period, which stood at 2.46%. Taking the whole of the population into consideration, the total percentage of mortgage foreclosures since 2007 stood at 0.74%.

By region, the percentage of the unemployed population affected by mortgage foreclosure proceedings since the crisis began ranges between the 10.17% recorded in Valencia and the 3.21% of Extremadura.

According to the AHE, 77,854 foreclosure proceedings were initiated in 2011, representing a decrease of 16.9% compared to 2010 – the first drop after three consecutive years of increases. An annual decrease was recorded even though the quarterly figures showed a rise in the number of foreclosures initiated in the fourth quarter, compared with a fall in the third.

In contrast, El Mundo reported that the number of evictions continued to grow, reaching 58,241 in 2011, which represented an increase of 21% compared to 2010. As for the mortgage foreclosures, in 2011 the number of foreclosure proceedings initiated fell in all regions except in Galicia, where the number grew by 3.14%.

The largest decreases were recorded in Madrid, with a drop of 26.7%, Catalonia (-24.2%) and Castilla y León (-23.5%). At the other end, the most moderate falls were registered in the Basque Country (-0.09%), Cantabria (-2.54%) and Aragón (-6.02%). The region of Andalusia recorded the largest number of proceedings, with 21% of the total, above Valencia (19.1%), Catalonia (17.6%) and Madrid (9.7%).

Article source: Kyero.com

The Spanish financial crisis and long term loans

Guest post by Amy Harris

Mayhem in the Med

Spain and EuropeThe Spanish financial crisis can be traced back to 2007, but there is no doubt it has worsened in recent months. The usual financially sound country was forced to ask for a bailout from its European neighbours.

Of course, Spain is not the only country to be affected, Greece also needed a bailout after coming close to bankruptcy in 2011. Long term loans had a big role in what resulted in a major financial dilemma for Spain.

The Spanish Housing Market

80 per cent of the Spanish population own their own homes. The governments of the 60s and 70s encouraged Spaniards to buy their own houses even offering them tax relief on their mortgages.

Demand for houses from 2003 onwards was high and over half a million new houses were built in 2005. Banks began to offer 40 year mortgages and recently even 50 year mortgages were available. Spaniards and foreigners alike flocked to buy properties in Spain.

Property Bubble Burst

With the economic downturn of 2008, the property bubble burst and Spain was one of the worst hit countries. The long term mortgages that seemed a good idea just a few years previously suddenly started looking like a risky move. If people defaulted on their mortgage, banks were unlikely to reclaim all their money.

Construction came to a halt and businesses were going into liquidation all across the country. Indeed, Spain had the worst figures for the drop in property sales in the whole of Europe between 2007 and 2008. Sales for this period dropped by over 25 per cent compared to the previous year.

European Impact

Although long term loans were not offered across Europe, the continent soon felt the force of the Spanish financial crisis. Indeed, in 2010, the UK section of the Spanish bank Santander announced loses of 8.5 per cent. This loss was attributed to the bad loans of the bank’s home country. Europe had to sit up and take notice or there was the real possibility that the whole Eurozone could be pulled deeper into the financial wilderness.

The Solution – Europe’s Bailout

As was the case with Greece, the governments of the Eurozone had to bail Spain out with significant loans. In June 2012, it was agreed that Spain would be given a rescue loan of 100 billion Euros, which would be funded by the Eurozone. It was hoped that this substantial amount of money would enable Spain to recover from the crisis and stabilise. A stronger Spanish economy would then sure up a weak Eurozone.

The Spanish financial crisis is by no means over and, the future still remains uncertain. The bailout provided by the Eurozone was only agreed in June so it is impossible to assess its impact so quickly.

What is evident is that Spanish lenders must learn from the past and show much more caution in offering long term mortgages – just as British lenders have learned their lesson from handing out 95 to 100 per cent mortgages.

Whilst the Spanish economy’s future is uncertain, it is hoped that a general Eurozone recovery, together with the large bailout, will allow Spain to once again become the strong stable economy it used to be known for.

Amy Harris is a writer for FinancialTraining.co.uk – which helps British and international students find the right financial courses in London and the UK. Amy is an American expat herself, and enjoys helping people with their careers and financial advice.

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

Average mortgage value increased in April

INEThe average value of new mortgages stood at 114,340 euros in April, a 0.7% increase on the interannual rate.

This is according to mortgage statistics for April 2012 released by the National Institute of Statistics (INE).

Mortgage Statistics – April 2012

During the month of April, the average amount of mortgage constitutions recorded in the land registries stood at 114,340 euros, a figure 0.7% higher than the same month the previous year and 1.5% higher than that recorded in March 2012.

In the case of mortgages constituted for dwellings, the average amount was 99,662 euros, 7.1% less than in April 2011, and 4.0% less than that registered in March 2012.

The value of the mortgages constituted on urban properties was 3,760 million euros in April, indicating an interannual decrease of 28.8%. In dwellings, the capital loaned exceeded 2,142 million euros, 36.1% less.

Mortgages by institution

Banks were the institutions that granted the largest number of mortgage loans in April (71.6% of the total), followed by Savings Banks (11.6%) and Other financial institutions (16.8%).

Regarding the capital loaned, Banks granted 72.6% of the total, Savings Banks 11.8%, and Other financial institutions 15.6%.

Mortgage interest rates

The average interest rate in April 2012 was 4.38%, indicating a 8.4% increase in the interannual rate, and 0.2% as compared with March 2012.

By institution, the average interest rate of Savings Bank mortgage loans was 4.53%, and the average term was 23 years. Regarding Banks, the average interest rate for mortgage loans was 4.54%, and the average term was 23 years.

92.8% of the mortgages constituted in April used a variable interest rate, as opposed to the 7.2% that used a fixed rate. Within the variables, the Euribor was the reference interest rate most used in constituting mortgages, specifically in 84.6% of new contracts.

Mortgages with registration changes

In April, the total number of mortgages with changes in their conditions recorded in the land registries stood at 26,494, with an interannual increase of 16.4%. For housing, the number of mortgages with modified conditions increased 17.0%.

Considering the type of modification of the conditions, in April 21,417 novations (or modifications produced within the same financial institution) were produced, for an interannual increase of 14.0%. The number of transactions that changed institutions (subrogations creditor) was 3,387, that is 22.8% more. In turn, 1,690 mortgages changed the holder of the mortgaged property (subrogations debtor), which implied an increase of 39.6%.

Number of mortgages with changes in interest rate conditions

Of the 26,494 mortgages with changes in their conditions recorded in the land registries in April, 36.4% were due to changes in interest rates.

The percentage of mortgages at a fixed interest rate decreased after the change in conditions (from 4.6% to 3.2% 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 Active Reference Rate of Savings Banks.

After the modification of conditions, the average interest of the loans increased 0.91 points in fixed interest rate mortgages, and decreased 0.26 points in variable interest rate mortgages.

You can see the full report here: Mortgage Statistics – April 2012