Spanish loans calm before the Covid 19 storm


Mortgage data Spain January 2020

Amidst everything that is going on at present. The INE in Spain issued mortgage data in Spain on the 26th. This shows Spanish loans calm before the Covid 19 storm.

The numbers relate to Januarys Spanish loans registered at land registry. Are therefore likely to reflect signings from December. Well before anyone dreamed in three months Spain would be on a lockdown.

All things being equal. Had COVID 19 not got in the way. It looks from Januarys Mortgages in Spain figures, like 2020 was off to a good start.

The figures will, as the year progresses, become meaningless. Certainly by the time March figures are issued. With the number of loans in Spain being registered hitting the floor.

Most badly hit initially, will be Easter. Which is traditionally a time when the buying and selling market is very active. And Spanish Mortgage applications increase.

Average loan size down against increased volume

The average loan size fell heavily in Januarys figures. Why this is the case is difficult to tell. In normal circumstances we may have expected this bounce to back.

Loan size for Januarys Mortgages in Spain was € 114.7k. The previous month was € 122.1k January 2019 € 120.8k. The downward trend was minus 6.1% and 5% respectively.

The total number of loans registered was 39.314. Up some 29.8% on Decembers figures.  22% up on same month of last year. Capital lent was 4.508.977. Only 6.1% over December and only 0.8% over January of last year. Due to the drop in average loan size.

However last January was up 74.98% over the previous month. So actual increases January over December was the lowest for 4 years.

62.9% of all new credit into the markets was lent for the purpose of buying a home. Much in line with normal averages.

Interest rates edged up but this won’t continue

Interest rate averages over a 22 year loan term were 2.55%. Slightly up on December 2019. Slightly down on January 2019.

Fixed rates as a mortgage product type .Also as a percentage of all transactions. Was 41.8%  Since its rise in popularity five years ago fixed rates have has stayed at this sort of level for last 12 months. With variable rates being very low. The 12 month Euribor stuck in negative territory. Many borrowers have decided the benefit of long term stability. Versus todays rate is not at present appealing.

Given what is happening currently fixed rate transactions may diminish slightly. As it is difficult to see rates rising for quite sometime.

Madrid already weakened in January

Madrid. after a very good 2019 showed signs of weakening. Even before the virus hit numbers of new loans. Numbers were up by 20.2% over Decembers figures. But down 22.7% over January of last year. In total 8,160 new Spanish loans were registered in the province. This will probably drop to near zero as figures are released in a couple of months.

Capital lent in Madrid dropped by 10.2% on last year.

Andalucia started the year well 41.1% up on December and 17.32% on last year. Cataluna, Valencia and the Balearics all saw increases.

Murcia, against very small activity, was up on last year. However the numbers remain tiny at 984 new loans. In comparison to the thousands back before the financial crash.

Much unknown for rest year

In total 29.113 loans were cancelled. Giving the Spanish Banks an uplift of over 10k new loans to their mortgage book.

Given there is going to be little house sale activity for at least the next three months. Lenders may not see large outflows. What they will see however is late payments creeping up, As the population struggles to cope with lack of work and income.

Had COVID19 not happened, Januarys figures suggest 2020 would have been relatively buoyant. What happens now who knows .It is likely the housing market and the loan market will see worse figures than during the financial crisis . Which would take some doing but is possibly inevitable.

How quickly it bounces back may very much depend. Not just on the internal Spanish market. Also the affect on savings and income of citizens of the many countries who buy second homes in Spain.

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