New Spanish loans drop through the current Pandemic
Whilst on the face of it the August numbers don’t look too drastic you have to also look at 2019 over 2018 to see the true picture.
Last year from June the numbers of mortgages in Spain completed reduced significantly because of the introduction of new regulation and requirements for the lenders that caused a significant amount of loans to be delayed in completion or offers withdrawn.
This meant in August last year Spanish mortgage levels dropped by 39.2% against 2018. This year in August the number of new Mortgages in Spain have dropped a further 3.4% against same month of last year which means in total there is 42.9% less completions in the month than 2018 figures.
August also showed a drop in numbers against the month of July down 23.8%.
Year to date figures no longer look positive
Year to date from a positive start in January and February the number of new loans in Spain is now down 10% against the levels of last year capital lent now down 2.2% due to average loan size being up year on year by 8.6%.
Spanish Mortgage capital lent, whilst down 22% on last month, was actually up 0.5% on same month of previous year. This was due to a higher average loan size and must be set against the fact that last year capital lent fell 35.2% from the same month in 2018.
Average loan sizes were up 4% on last year, up 1.8% on last month at € 134.678. This itself may come under pressure as the years figures progress. Spanish Banks may become more cautious about loan to values and the possibility of house prices dropping as the economic situation worsens.
Interest rates remain low
Interest rates for mortgages in Spain remain very stable and are possibly the only positive for the general market. The average interest rate in August over a 24 year term was 2.49%. This was down from 2.54% on the month of July and down from the 2.56% of the same month in 2019.
For the first time a few months variable rate product types outstripped fixed rates. 50.6% of all new loan deeds completed on a variable rate basis, and 49.4% on a fixed rate basis.
Borrowers may be encouraged at present to take advantage of the fact that it is highly unlikely the 12 month Euribor, to which variable rates are linked, is likely to rise in the short to medium term future. Applicants are possibly forgoing longer term stability for lower starting rates. Best Buy tables show little reductions or increases in product criteria.
The average variable rate was 2.18% and the average fixed rate over the same term 2.87%.
Tourist regions hit the hardest
Regionally no-where is seeing any long term growth but some regions have been hit harder than others by the situation.
Those regions below the average drop in numbers include
Balearics down 32.96% on last month
Cataluna down 36.7% on last month
Valencia down 38.6% on last month.
All three being big tourist areas are suffering from the lack of foreign buyers in Spain and the impact of a quiet summer putting pressure on those that live and earn there.
Regions performing slightly better than average include
Andalucia down 19.8% on last month and 3.4% on last year
Canaries down 12.9% on last month and actually up 55.9% on same month of last year
Madrid down 20.2% on last month and only down 6.1% on last year
Murcia down 18% on last month and up 3.2% on last year all be it off back of a very small number of transactions.
Spanish Banks see net reduction in their loan books
In total for the month 20.535 were redeemed or cancelled so for the first month in many the Banks in Spain saw a small net outflow to their mortgage books. It can be anticipated this may be the trend for the next few months.