Septembers loan data for Spain released by INE.
Loan levels in Spain under pressure in the month. As was the same in August. For Spanish mortgages . The month of September was well down on the previous year. It would appear completions still get delayed post the new regulation and processes.
Indicators like level of loans redeemed. Tend to suggest it is a blockage in the system. Rather than a permanent decline in business levels.
22,488 new loans were registered at land registry. However equally only 22,365 loans were redeemed.
Because the data relates to Spanish land registry information. Rather than Spanish Notaries, Septembers completions probably reflect general signings from August. These were heavily affected by the changes. The obligatory cooling off period. Also enders lack of preparation for the new offer document requirements.
Regulation reduces speed at which Spanish home loans go to completion
Whilst over the last few months we have started to see the log jam starting to move. Even now in November the impact of the new process is being felt.
It remains difficult to get loan applications to completion at any level of speed. Many applicants are finding they are having to have new offers prepared. As lenders adapt their systems and catch up on the new requirements. For each new offer of a mortgage in Spain the cooling off period must happen.Delaying when and how a completion can happen.
Fixed rate limitations
Access to fixed rate best buys for non resident applicants continues to drop. As more and more Spanish Banks review what currencies they would be willing and capable to accept.
UCI owned by Santander, due to political reasons have not included US dollars in their list of countries.
A sledge hammer to crack a nut, knee jerk reaction of Banks in Spain is what we have come to expect. Denying access removes any dubiety. Also any risk for the lenders. This is how many lenders have dealt with the issue.
The reality thought through logically is that no-one even with a 20% drop in currency would look to change their loan. To the currency in which they earn. Firstly currencies fluctuate and rarely stay at very low levels. Historically they have a range level against the euro. Unless the country is on its knees the drop will eventually rectify itself. So the issue would be short term.
When capital is changed to a new currency the mortgage in Spain level would increase accordingly. So when looking at impact most borrowers would not wish to change the currency. Increase the amount they owe. For something that will doubtless adjust back in the short or medium term.
However the law stipulates the lender must allow a currency change. If they cannot deal in that currency they cannot take view it is unlikely to happen. Because if it does they have to abide with request.
Key factors for September
Over last year loan levels in Spain were down 31.6%. The average loan size was up significantly. At € 135.4k. Despite this increase, due to the significantly lower number of home loans capital lent was down on last year.
Month over month September was an improvement on August. However only in line with the increased percentages we normally see at this time year. Given August numbers were very low one might have expected the month over month figures to be above normal trends. Rather than in line with.
Interest rates continued to edge downward over last year and last month.
The total average rate over a 24 year term was 2.51%. Variable rate averages were 2.25%. Down 4.5% on last year. Fixed rate averages were 3.08% fixed for 24 years. Up 1.88% on last year.
Fixed rate product types. As a percentage of all new loan deals. Fell in the month to 38.3%. Having been at over 40% of all new applications and completions for a number of months.
All regions saw a drop in business over last year. Madrid saw a good increase month over month. many were either static or dropped.
UK residents applying for a Mortgage in Spain
Challenges remain for the market. With British non resident applicants feeling the impact of the lenders concerns over an impact of Brexit.
The key issue for the Banks is a belief that deal or no deal sterling will come under pressure. They have tightened affordability ratios to reflect this concern. Along with their perceived view of the economic impact of no deal on the UK.
Loan to values have been adjusted for British buyers. Therefore 70% now being much more difficult to obtain, at least in the short term.
Middle east buyers have been affected by the currency law. Because most lenders will not agree to change a loan to Dirhams. Or any other Middle East currency.
Access to multiple lenders
More than ever good advice and access to a range of lenders is needed. This is required by applicants at a time when less independent, experienced and regulated mortgage brokers will be operating in the market place. Because they are unable to meet the new requirements. Both in terms of the official qualifications and Bank of Spain registration.