Mortgages in Spain
Total mortgages in Spain in May as according to those registered at land registry rose by 7.3% when compared to May of 2014.
For mortgage credit taken for the purpose of buying a home this was an increase of 10.9% showing that borrowing for the purchase of dwellings is increasing at a faster rate than total borrowings.
The amount of loans granted and completed for dwellings was 19,732. The average loan size taken was € 103,922 up 4.4% on last year. The increase in average loan size is partly down to the Banks movement on loan to values, and partly down to the fact that in the areas of most home purchase growth, prices have either stabilized or have increased slightly.
The average loan size was up on the previous month of April but down in comparison to January and February of 2015 when loan sizes nearly hit 110k. Total capital loaned for dwellings was 2.050 million up 15.8% on last year, 8% above that lent in April this year and 24% accumulated for the whole of 2015 so far.
Numbers of loan made in the month was 4.6% above that for April this year
When looking at normal trends between the months of April to May over a 5 year period the increase of 4.6% is the lowest increase between these two months. This will be partly due to the fact that overall numbers of loans has grown in 2015 since the beginning of the year.
The same trend followed for capital lent so whilst up 8% over April, this was the second lowest increase over a 5 year period.
Of all lending made by the Spanish Banks in the month 54.9% was lent for the purpose of buying a home. This is in line with normal trends.
Interest rates and Indexes
The average interest rate by which home loans were competed in May was 3.4%. Given that the 12 month Euribor dropped again in May over April this means the average margin charged by the Banks increased slightly. Whether this is a blip or an ongoing trend remains to be seen but given competition, particularly for the resident market, it is unlikely margins will start rise on a regular basis. Aprils average rate was 3.29%.
When considering the average rate against last year the overall rate has fallen 11%.
Variable rate product remains the favorite product type made up 92.2% of all loans grated within fixed rates only making up 7.2%. This is a minor but not sustainable move toward fixed rates. The Euribor was the index used in 92.2% of all new contracts.
Regionally all regions are now outperforming the previous year, except for Asturias where loans in terms of numbers and capital lent are down significantly on last year, and the Balearics where numbers of loans are down marginally, although capital lent remains above last year.
The highest number of home loans granted was in Andalucía closely followed by Cataluña, Madrid and Valencia.
Of these areas most popular with international holiday home buyers the Canaries and the Balearics remain rather static against the performance of last year. This is however against a back drop of better than average performance in 2014 when compared to other regions.
Continuing mortgage outflows
Whilst new mortgages constituted continues to grown in 2015, there still remains a large gap each month between mortgages canceled and new loans granted. In May this year 19,732 new home loan deeds were signed and 24,930 home loans canceled. The Spanish Banks are therefore still chasing their tails trying to prevent further outflows of the overall book and not as yet getting back into or even close to positive territory and loan book growth.
What long term affect this will have on net earnings will remain to be seen but the Banks in Spain will be keen to start closing the gap soon.