Data published today for new loans constituted in December 2014 have shown another consecutive month of year on year increases.
Lending for homes
Loans registered at Land registry in Spain for the month of December showed an increase in capital lent, numbers of loans and an increase in average loan size.
15,962 loans were granted a 28.9% increase on the same month of previous year.
Capital lent increased by 33.8% and the average loan size rose by 3.8%.
The number of home credits also rose marginally against the previous month of November being up 0.4%.This month on month increase whilst small, is the first time in over 5 years that December completions have been above those of November suggesting the trend of increased lending in Spain is set to continue.
Lending for the buying of a home in Spain in comparison to credit lent for commercial entities made up 57.7% of all capital lent within the month in line with what is normally expected.
Types of mortgages and interest rates.
Of all the credit granted within the month 93.6% completed on a variable rate with only 6.4% of customers electing to take fixed rates. Fixed rates are not as readily available in Spain, are often well above the variable rates, and have much higher redemption penalties.
The average interest rate under which home loans completed was 3.50% which is 17% lower than the same time last year. This is partly due to the continuing drop in the 12 month Euribor, to which most loans are linked, and partly due to competition between Banks and a subsequent lowering of margins.
Loan levels by Autonomo region
Of the key regions positive growth was seen within the month in the regions of the Balearics, Madrid, and Murcia. Andalucía, who as normal had the highest absolute number of loans granted, showed a slight downturn when looking at the year on year figures falling by 3.9%.
All regions except the Asturias, Galicia, and Rioja showed an annual increase when considering number of loans in 2014 against the whole of 2013.
Results for the year of 2014.
In 2014 the provisional data shows that total number of loans when compared to 2013 rose by 1.6% on the year, level of capital lent rose by 3.8% and average loan size increased by 2.1%.
The total number of new Spanish mortgages in the year was 202.954 this compared with 199.700 in 2013. Whilst it was positive news to see an increase, the numbers were still never the less lower than the year of 2012 and half of the level of new loans granted in 2011. both of these years fell within the banking crisis and the economic issues in Spain. There is therefore some way to go before a sustained and real recovery in the credit markets can be said to have happened.
Cancellations
Whilst the Spanish Banks have had in place targets for the last couple of years and have been more aggressively looking to add new business there remains a significant negative outflow on the mortgage books. In 2014 202.954 new loans were constituted but 282.474 loans were canceled. This is an outflow of 79.800. For the Spanish Banks who at one stage wanted to shrink their credit book this outflow will be hitting the bottom line both in terms of interest earned and auxiliary products lost.
The Banks will need to see further improvements in numbers of loans in 2015 and a slowing of redemptions if they want to maintain earnings. This should increase competition and be good news for the consumer as pressure comes on the lenders to reduce margins further and provide a more flexible lending environment.