Spanish mortgage growth in September
Septembers loan growth according to the INE in Spain saw one of the best months of the year so far.
The average Spanish loan size was much higher than previously and reached € 127.7k this is well above the average for the year.
September 2017 the average loan was € 122.7% and in the month of August this year € 122.4k.
The rise in the loan size along with a good increase in the number of new loans for the purpose of buying a home meant the capital lent was up 17.8% on August 2018 and 14% up on the same month of the previous year.
In total 32,457 new mortgages in Spain were constituted at land registry and the capital lent was 4.4145.801.
Home loans continue to increase against 2017
After a couple of slower months in August and July the inter annual increases still remain in the positive boosted by Septembers figures.
Numbers of new loans are up 9.7% for the year Capital lent is up 15.5% on 2017 and the average loan size is up 5.3%.
The money lent for buying a home made up 63.1% of all new credit in the system which again was a positive month for the residential loan market.
Whilst the figures are good the trend is also in line with what you might expect in terms of loan production over the month of August. In the last 5 years it is normal for September to out perform August figures.
Average fixed rates edge up
Interest rates in the month for variable rate product types were down on the same month of the previous year 8.3% lower than 2017.
The average fixe rate however showed a small increase on fixed rates of last year coming in at 3.24%.
In total just over 40% of all new loans were taken on a fixed rate basis.
Madrid most active region
Regional performance was very strong in Madrid and most coastal regions except Balearics who had a very good year last year but has struggled to gain any growth in 2018.
Challenges of Brexit and affect of Mortgage deed tax changes
Since September with the debacle on mortgage deed tax and continuing concern over Brexit and the impact this may have we have noticed a considerable drop off of enquiries form the UK market.
Whilst pipeline business is strong and completions should be maintained for the next couple of months new business from the UK market is very slow.
Until such a time as the UK has agreed a final deal and the impact this may have on the economic situation it is difficult to see the level of buyers from the UK increasing.
There are a number of concerns some of which are just about ability to travel to Europe easily after Brexit but the key concern of most applicants is the financial impact that Brexit may bring that could affect their individual situation over the next couple of years.
Taking on a big commitment to borrowing in Spain with this level of uncertainty has suddenly in the last couple of months hit home with potential buyers.
Decisions to buy are being delayed until the outcomes are better understood.
From the perspective of the Spanish Banks at the moment we have not seen any change to criteria for UK buyers but risk departments are looking for very vanilla cases when granting the full 70% possible.
In the New Year we may see some adjustments to maximum loan to values and affordability ratios to allow for the possible impact on jobs, business and exchange rates.
The next few months may well be testing times.
Spanish Banks see a large net inflow of new lending.
On a final positive note the amount of new loans in September well outstripped the amount of loans cancelled and gave the Spanish Banks their best net inflow of new loans and increase to their mortgage books for many, many, years.