August 2013 Mortgage completions Spain

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The INE monthly mortgage data was released today for August 2013.

There was little to cheer about in the statistics where for yet another consecutive month the amount of mortgages in Spain being redeemed outstripped new mortgages constituted.

Last week BBVA Spain announced it expected this trend to continue until half way through 2014.

The total number of Spanish Mortgages raised against dwellings in August was 12,147. The number of mortgages signed dropped by 11.8% from July 2013 and by a massive 41.7% against August last year. The current year on year numbers of Spanish Mortgages registered in 2013 is now down by 27.8% on comparison to the same time in 2012.

Average interest rates edged up in August partly as a reflection of the Euribor increasing slightly and partly due to a continued trend within the Spanish Banks of increasing the margins above Euribor that they charge.

The average loan size of a Spanish mortgage for residential dwellings in August dropped by 8.2% as of the same month last year and stood at € 95.702. This drop can be related to a continuing drop in house prices and a tighter control on maximum loan to values.

The amount of capital lent, due to the lower numbers of loans and lower average loan sizes, also dropped in August by 15.8% from July of this year and by 46.5% as of the same month of last year. The overall yearly trend across average loan amount, capital lent, and number of mortgages is significantly down on a year on year basis.

The amount of mortgages redeemed against dwellings was 19,831 so yet another consecutive month of large net outflows.

Andalucía with its much higher level of international buyers was the region who had the most mortgages granted but also had the highest level of mortgages of redeemed.

The Canary Islands, again possibly boosted by lower house prices and international buyers was one of the few regions to show a month on month increase in loan numbers.

At ground level criterias applied by the Banks for the granting of a mortgage application remain tight with certain types of clients excluded from borrowing. Owners of more than one property in country of residency continue to find treatment of mortgage payments they are liable for, versus what rental income will be assessed and considered, make meeting Spanish Banks criteria almost impossible. Self employed who limit personal earnings they draw will also find Spanish Banks difficult to deal with as there remains an almost obsessive focus on what is on personal tax returns, rather than the overall financial stability of the individual and profits from company.

 

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