New Spanish Mortgages
The number of new mortgages in Spain constituted in Spain in October 2020, according to land registry was 28.248. This was down 5.9% on last October. Given October 2019 was a bumper month for backlog completions. Due to regulation change, the figures for home loan data in Spain is not as bad as it seems.
The average Spanish loan size was down slightly from September. Up against October of last year. Higher loan sizes has meant overall capital lent for the buying of a home in Spain has not dropped. In comparison to the number of new Spanish mortgages.
Average Spanish Mortgage loan size down slightly
Against the previous month Octobers Spanish Mortgage figures were up 5.1%. Capital lent up 5%. Because of a small monthly drop on average loan size.
Annually over October of previous year capital lent is down minus 1.6%. This is because numbers are down. Also average loan size only up 4.6%.
Annually accumulated, given the total COVID 19 situation. Its affect on the housing and mortgage market in Spain. Mortgage in Spain numbers are not as drastic as they could have been.
Home loan data Spain show decline in Mortgages in Spain
To date numbers of new Spanish Mortgages are down 7.4%. Capital lent down 0.6%. Average loan size up 7.4%.
The home loan data in Spain suggests Madrid for local and resident loans has held up particularly well. Hardest hit has been the smaller regions. Also the coastal regions due to lack of non resident holiday home buyers.
It is likely however the year will end up a higher percentage down than current figures suggest. Both November and December were difficult for completions. Due to many travel restrictions many non resident buyers were unable to travel. Eiither to view property or complete at Notary. Despite this it is still possible to go through the mortgage application process in preparation for a future purchase.
Brexit and COVID are double hits according to home loan data Spain
Brexit also played its part. Many UK buyers were uncertain of the outcome. This along with pandemic uncertainties has subdued the market.
We can expect the first few months of 2021 to be volatile. Many mortgage completions are delayed or postponed indefinitely. Possibly until the financial fallout of COVID and indeed Brexit is better understood.
Interest rates remain low. This looks to continue in the short to medium term. Therefore making borrowing the cheapest it has ever been.
Average interest rate for October was 2.4% for loans for homes. Average variable rate being 2.19% over a 25 year term. Fixed rate averages over a 25 year term being 2.85%.
The split between variable and fixed rate mortgage product types was 51.1% of all new loan contracts being floating rates and 48.9% on fixed.
Low redemptions mean Spanish Banks still see net inflow to mortgage books
Whilst the numbers on new completions is down. So are cancellations and redemptions. Meaning despite the difficulties Spanish Banks continue to see some growth in their mortgage books. In October 25.691 loans were redeemed against 28.248 new mortgages in Spain. This along with an uplift over the year of average loan sizes has been a positive.
The end of 2020 and start of 2021 may however see a further downturn in business as local restrictions, worldwide travel restrictions and financial uncertainty take their toll.
We may also start to see a drop in house prices, although some sectors like Villas and those in countryside remain relatively buoyant. The sale of apartments in Cities and coastal areas are feeling the pinch.