New Spanish Mortgages for November
New mortgages in Spain signed at Notary and registered at land registry was a total of 28.756 in November 2020.
This level was down by 2.4% on last year for the same month but up 1.8% on Spanish mortgages for the month of October.
The average loan sizes are holding up well up by 5.5% over last year for the month, up 1.3% on October and total for the year to date up 7.2%.
This increase in average loan sizes has meant that despite the number of loans in Spain being down for year to date, the actual lent in the year is only down a marginal 0.2% on 2019 figures.
Year to date the level of new loans is down 7% which given the overall worldwide situation is not too bad. It is off the relatively static year of 2019 but certainly not as bad as it could have been.
Cancellations and mortgage reductions remain low
The level of cancellations and redemptions has dropped month by month so in fact from a net lending book point of view Spanish Banks are seeing a better year in 2020 than they have for many years.
Interest rates decrease marginally again
The 12 month Euribor to which variable rates are linked dropped again in the month. The decrease is marginal but remains in negative territory.
The Euribor and ECB rate being so low, and looking to remain that way, seems to be encouraging more mortgage applicants to look at the variable rate rather than the higher fixed rate options.
A few months ago more new residential loans completed on fixed rates than variable but the last couple of months this has reversed.
In November 50.8% of all new loan contracts for the purpose of buying a house completed on a variable rate basis and 49.2% on fixed rates.
The average interest rate for a 25 year term was 2.45% when broken down this was an average variable rate of 2.19% and an average fixed rate of 2.77%.
The margin between average interest rates for non resident buyers and nationals is in fact very small at present and given a resident will have to take many linked products to get the lowest rate Spanish Banks are holding non residents rates low too as best buys indicate.
The margin above Euribor all applicants have to pay is now much higher than it was a few years ago with 1.5% above being very good and 2% being normal in comparison to a standard 1% back before banking crisis, but the difference between what you could achieve as a resident to non resident has narrowed.
No trends by region in Spain
Regionally there was not much in the figures this month to suggest any kind of regional trend. The Balearics had a low volume month in November but number of new loans is small in comparison to other regions in any case.
Andalucia saw a downturn across all levels but again no real trend up till November it was holding up pretty well.
Travel restrictions and local lockdowns will affect early 2021 figures
Travel restrictions and local lockdowns is still preventing much activity in 2021 so the start of the year will show low numbers when they are published.
Next month will see the full 2020 overview of Mortgage activity in Spain based on what we have so far the year will show a decrease but perhaps not as bad as could have been predicted after Spain was hit hard by COVID March 2020.
Whilst the numbers on new completions is down so is cancellations and redemptions meaning despite the difficulties Spanish Banks continue to see some growth in their mortgage books. In October 25.691 loans were redeemed against 28.248 new mortgages in Spain. This along with an uplift over the year of average loan sizes has been a positive.
Mortgages for homes make up a higher percentage of all new lending
One area aside from the high increase in average loan sizes that there is a big change is the level of new Mortgages in Spain for the purpose of buying a house. This reached 70.3% of all new lending in the month. In normal times this would be more like 60% so loans for commercial reasons, land purchase and Rustica are well down at present.
The end of 2020 and start of 2021 may however see a further downturn in business as local restrictions, worldwide travel restrictions and financial uncertainty take their toll.