July home loans up in Spain. Normal trends in Spain are for Julys figures to be below June. This year the trend was reversed.
Maybe due to a number of delayed completions from June. These being the Mortgages in Spain that fell foul of the new regulation requirements. Implemented mid June. The new regulations required changes to the offer documents. Also a cooling off period. Meaning some loan applications could not meet previously stipulated completion dates.
Average loan sizes and money lent
The average loan size was € 121.400. Up from Junes € 120k. But down against last year of the same month. When average loan size was € 124.5k.
In total for the purpose of buying a home 33,344 new deeds were registered at land registry up 11.15%. Over the same month of the previous year.
The total capital lent was 4.084mk. Up 12.9% over June and up 10.3% on last year.
The average loan size was increased by 2.5%.
Spanish mortgages provided specifically for the purpose of dwellings made up 61.9% of all borrowings in the month. This is the average percentage level in Spain.
Fixed versus variable rates
The trend toward fixed rates. Which has been a major market place change in the last few years. Seems to have stabilise around the 43% level of all completions. Whilst there had been a big drive toward fixed, Variable rates are very low at present. Have been so for a long time. With no ECB interest rate increases seeming to be on the horizon. Therefore applicants still prefer the variable option on many occasions.
Tracker rates have the advantage of being lower than current fixes. Early repayment penalties are in general lower. Fixed rates provide long term certainty. Allowed applicants, who have currency fluctuations to take into account, to only have to factor in one variable. Rather than two potential variables.
This has rather been negated by the fact many Spanish lenders will now not offer fixed rates. To those who earn in currencies other than the Euro. Because of the requirement for them to offer a change of currency at a later date. If Banks in Spain offered a fixed rate. Bought long term funds at one price, then have to change currency. They could be left with a very high cost to the margin.
Benefits and drawbacks
Residents of Spain often take the view that fixed rates are only of benefit if they run the loan in the medium to longer term. That the likely hood of moving from a main residence within 5 years is higher. In comparison to if the property is second home.
For these reasons the level of fixed rates contracted. In comparison to variable trackers seems to have plateaued.
The total average interest rate for dwellings for the month of July was 2.56% over a 24 year term. This was down 1% on last year.
For variable rates the average level is 2.28%. Down 3.4% on last year. The average fixed rate was 3.01% up 0.1% o same time as last year.
After a few months of small rises the 12 month Euribor, used for loan revisions dropped marginally. For last 5 months. But rose again very marginally to minus 0.339% for revisions in October.
Andalucia region saw a better than average performance in July as did the Canaries.
The Balearics is behind on last years numbers. But off a small base. Murcia whilst having better recent figures, remains behind last years level. Which in themselves were very poor.
Madrid whose numbers were well up last year is struggling to build on this. Which may be why average loan sizes are lower than last year. Average loan sizes in Madrid and Cataluna are always higher than elsewhere in Spain.
UK borrowers lower but Scandinavian borrowers increase
UK buyers are not as prolific at the moment. Due to low exchange rates making a purchase much more expensive than a year ago. Also an unwillingness to take on such a large obligation with Brexit uncertainty.
Middle East based expàts are finding it difficult to get a lender. Post regulation changes. A few have found themselves with Spanish mortgage offers pulled at the last minute. There remains lenders that will lend. However quite a few have changed their rules on dealing with certain nationalities.
Other nationalities like borrowers from Scandinavia, Belgium and Germany seem to be on the rise. Are welcomed by all Spanish lenders as they are seen as stable earners and good payers.
Net inflow to mortgage books
Loans in Spain cancelled within the month of July reached 29,668. With 33.334 new loans registered the lenders had one of the biggest inflows to their loan books for many years.