Issued today was the Spanish mortgage data relating to March of 2014.
Since January 2014 Spanish Banks have had lending targets but the first two months of year showed little movement in terms of increases in either number of loans granted or capital lent.
For March 2014 we have finally seen a year on year on increase in both numbers of loans and capital lent.
There was in March a sharp increase in total mortgages which includes loans secured for commercial as well as residential reasons. The Spanish Banks have had many campaigns in place since the beginning of the year to get credit flowing back into the small and medium size business sector and the overall increase of 16% in capital lent against an increase of 7.7% in the area of dwellings shows where the bulk of the increase in credit was focused.
With residential properties still making up 47.6% of the capital lent in Spain this sector remains the key area where movement is required in order for the mortgage market in Spain to stabilize and grow.
Spanish Residential Loans
For the first month of 2014 March showed a small increase in both numbers of loans constituted and average level of capital lent where it related to dwellings.
The amount of total capital lent for dwellings was up 7.7% on the same month of the previous year.
The number of mortgages granted and completed on dwellings was 16,625 an increase of 2% on the same month of the previous year.
March also showed the first increase in 5 years of number of mortgages granted between the month of February and the month of March.
Total capital lent was also up 1.2% from February to March again the highest intermonth increase seen in the last 5 years.
Average interest rates
The average interest rate granted on dwellings was 4.04% in March a drop of 0.7% from the previous month this was against the Euribor increasing slightly indicating the Banks are dropping margins, all be it slowly and by small amounts. The interest rate average is now at its lowest for at least 12 months.
With new best buys being launched by the Banks in the months of April and the Euribor holding relatively steady the average interest rate should continue to fall in the short term in Spain.
The average total interest rate across all loans was 3.94% which suggest there is a rate war on commercial loans and that loans for business are achieving lower rates than those for residential purchases.
Variable rates versus fixed rates
92% of all loans constituted were on a variable rate with 8% contracted on a fixed rate. This is a marginally different split to normal with a small increase in the percentage of rates fixed to variable.
The key issue for the banks in Spain remains the net outflow of loans from their books. Spanish Banks continued to hemorrhage mortgages. Whilst 16,625 new residential loans were completed in March the Banks lost 25,823 mortgages which were canceled in the same month.
The Banks have a long way to go if they wish to stabilize their lending and start re-building their overall mortgage books.