October Lending data
October’s completions as reported by the INE in Spain showed an unusual but small decrease in the average value of capital lent for residential purchases in October.
Numbers of mortgages however increased by 18% over the amount of the loans constituted in October 2013 so actual capital lent increased. For Urban property the amount of money lent was 3.299 million an increase of 21.7% and across all dwellings 1.7663 million was lent and annual increase of 14.9%.
New loans granted for dwellings formed 49.1% of the total capital lent by the Spanish Banks in October.
Due to an increasing level of new credit being taken over the last few months, the difference between new loans in September to October, as a trend over the last 5 years, showed a decrease. Month on month it is normal for fewer loans to be constituted in October to September but the decrease due to high levels of activity in September 2014 was down by 8.5% when considering numbers of loans and by 15.2% when considering level of capital.
As normal the majority of loans granted were taken on a variable rate basis with only 7.2% of mortgagees electing for a fixed rate. The average interest rate at which credit was granted was 3.60% which is 14.1% less than the same month of the previous year. The drop in interest rates is partly due to a decreasing Euribor level which is currently at an all time low for credit purposes standing at 0.329%, and a continuing response from the Banks in Spain to competition and a lowering in general of margins being charged and more best buys.
By region Andalucía had the highest number of loans in the month followed by Cataluña and Madrid. The capital Madrid saw the highest level of capital lent. Interestingly Madrid however had the biggest decrease in numbers of loans when looking at Septembers completions.
The Balearics having had a few months of rather depressed lending levels showed in October the biggest increase when looking at the regions between numbers of loans granted in October to September.
Despite the more positive lending levels the number of loans cancelled yet again outstripped the number of new loans granted which will continue to put pressure on the Banks to increase lending levels through 2015 to prevent a further hemorrhaging of their books and the subsequent loss of earnings this will bring.