May 2023 Mortgage completions in Spain
Spanish mortgage lenders saw Mays mortgage completion levels Spain upturn over April.
The month on month increase was lower than that of last year.
The average loan size increased significantly for the month. The average Spanish mortgage was € 141.8k. In comparison to 136.9k the previous month. However this was lower than last years 148.7k.
Numbers of new loans and capital lent by Spanish Mortgage lenders
In total 33.398 new mortgages in Spain were registered. This was up 23.5% over April. Down 24% over same month of last year. Also down year to date b y 11.9%.
4.753.758 mk was lent by Spanish Banks for purpose of buying a home. An increase of 27.8% over last month. Helped by the higher average loan size. Down 27.5% against last year and down 13.3% year to date.
Over 65% of all lending in Spain was designated for the purchase of a house.
Home loan interest rates Spain
Interest rates an average were 3.15% over a 25 year term. In July the Euribor was 4.007% and in June 3.87%. Its difficult to therefore to see how in May this average was possible.
Average variable rate was 2.79%. Average fixed rate 3.40%. According to the data.
For the same month of previous year the rate was 1.81% so even without accuracy the impact of rising rates can be seen. However this an increase of 1.34% over last year. The Euribor has risen from negative territory to 4.007%. A significantly higher rise than reported Spanish loan rates.
Variable trackers versus fixed rates in Spain
Variable mortgage product types are linked to the Euribor. Nearly always the 12 month. They track the Euribor. Your rate is determined by the margin above Euribor granted. In general this will be for non resident lending, between 1.5% to 2% above.
Fixed rates in Spain are better value for money. It is still possible to achieve a rate below 4% fixed for up to 25 years.
Spanish Banks are normally offering either variable or fixed. A couple of lenders now offer mixed mortgage types. A term of fixed from 2 to 5 years followed by variable. These products help protect against shorter term rate rises. Whilst leaving flexibility to take advantage of dropping rates in future.
In total 43.985 loans were cancelled. This is a worrying trend for Spanish lenders. The 3rd consecutive month of net outflows. Meaning they are losing interest margins and other more lucrative banking products.
2023 lending challenges in Spain
The market is a challenging one at present. Both for resident but also non resident mortgages in Spain.
A recent survey in UK showed that numbers of people buying holiday homes abroad had dropped by a third.
This is mainly due to visa restrictions within Europe.
The ability to use a holiday home in Spain has diminished. The cost of owning one has increased. Taking on a Spanish mortgage commitment for 60 day flexibility is a hard call.
UK borrowers in Spain reduce
The UK non resident mortgage market has dropped considerably. The market has fragmented into small purchases or large ones. For now the middle market is almost non existent.
There is also a large downturn in loan applications from the Middle East. This is due to restrictions on currencies as per the 2019 mortgage regulation. Spanish Banks will need to become less and less reliant on non resident lending or adapt product offerings.
It is most likely we will see a return to pre 2000. This was when only a handful of lenders actually had a non resident portfolio.