April 2020 Spanish loan data
Covid 19 impacts on Spanish Mortgage levels. Aprils Spanish loan figures start to show the impact of the lockdown. Of numbers of new loans constituted in the Month.
Mays figures will almost certainly be lower again. It will take a few months for good levels to return.
On the positive side for the lenders in Spain the amount of mortgages in Spain being redeemed has dropped. By a higher amount than the new loans being completed.
Why are there less loan redemptions
For most Spanish citizens paying off chunks of an existing mortgage. Or moving. Also making a new commitment. Is something they may well postpone until a degree of normality and the full economic impact is known.
This means using savings to pay up a loan. Decisions to move house may well be delayed. Until there is more certainty. Large outflows to the mortgage books. As suffered during and after the financial crisis, will not be as high.
In April 23.840 new loans signed was down 18.4% on same month of the previous year. As Covid 19 impacts on Spanish mortgage levels.
The average loan size dropped by 1.2%. Coming in at 125.338. Capital lent was down 11.4% on last year.
In terms of against previous month numbers of loans was down 9.6%. Now down 2.1% year to date. Loan sizes were down 2%. But still up 10.4% year to date. Capital lent was down 11.4% on last month. However up 8.2% year to date. Due to the higher average loan size.
In April 63.6% of all new credit in the market was lent for buying a home. This will probably remain at these sort of levels. Commercial lending will almost certainly be hit harder than residential lending.
Interest rates Spain
Interest rates remained stable. The overall average rate for a 24 year term was 2.48%. Down on March level. Of this, the average variable rate was 2.13%, and the average fixed rate 2.86%.
Possibly as a reflection of new borrowers wanting some future certainty, fixed rate products made up 51.6% of all new contracts. And has overtaken variable rates. Given 5 years ago they made up less than 5% of all new contracts. The shift in mortgage product type in Spain has been vast.
Madrid feels the pain
Madrid suffered in the month.As expected. Decreasing 9.6% over last month. Also down 27.5% on last year. The canaries was down 31% and 36.8% respectively. Valencia and Murcia bucked the trend with Valencia only dropping 1.1% on last month. 7.7% on last year. Murcia down 10.3% on March, but up 19.4% on April of last year. Andalucia was actually up on March. By 6.88%, but down on last year by 7.6%.
New Spanish Mortgage enquiries increase
New mortgage enquiries have been relatively buoyant. Since the beginning of June. After 6 weeks of nothing at all. As things start to open up non residents who want to start looking at buying in Spain. Has improved.
Whilst the upfront numbers show some positivity. In terms of the loan application process it will be some time before any of this comes to actual business. For either brokers or the Banks in Spain.
It remains very difficult for potential buyers to visit Spain. To actually look for property. Many feel prices may drop. So whilst they are starting to look at the possibilities they may still defer any buying decisions. Until much later in the year.
At the moment it appears that by quarter 4 activity levels should recover. This is still subject to what happens in the coming months. Economic impacts, danger of a second wave and further shutdowns.
UK citizens seem focussed on doing something before end of year. So to have secured a property in Spain before Brexit finally happens. But this is still fragile in terms of its certainty. Whilst the desire may be to buy before Brexit, other factors will play a part. As to whether this is possible for them.
We can expect, and is probably the only certainty, that the year will remain a difficult one for everyone.