Month of December
December figures for the banks in Spain bring to a close the performance of loans in Spain for the year of 2016.
December itself showed a drop in completed loans from November but an increase on the same month of the previous year.
Total number of Spanish mortgages for buying of homes, registered for the month of December , was 20,747. This was an increase on last year of 6.9% but a decrease on November of 18.4%.
The average loan size for Mortgages in Spain rose in December from 109.8k in November to 112.7k. This helped the level of actual capital lent hold up a little better than the numbers reflect. The average loan size rose by 2.6% on the month of November and was up 3.4% on the same month of the previous year.
Year on year performance
The performance of December over November was slightly unusual in terms of the level of decrease but in line with general market trends where December levels drop below those of November due to the Christmas holidays etc.
The percentage of capital lent by Spanish Banks for the purpose of buying a home made up 60.9% of all credit slightly down on Novembers figures but an increase from the last 5 years average.
Interest rate news
Variable rate product types made up 68.4% of all lending taken very much in line with last month and a reflection of the massive move in 2016 toward fixed rates products. In 2015 over 90% of all loan contracts completed on a variable rate basis.
The average interest rate dropped from 3.22% in November to 3.18% in December. The Euribor continued to decline but at a very slow pace dropping to minus 0.095% by December.
Autonomo regions vary
Regionally the picture was very up and down with some regions showing large increases from the previous month and from the same month of the previous year and some showing declines.
Andalucia who ash seen strong growth throughout 2016 had a poor month being slightly down on both numbers of loans registered and capital lent, although due to the increase loan sizes the capital lent when assessed against last year did just struggle into positive territory.
The Balearics had a poor completions month against November but was well into positive territory for both numbers of and money lent when assessing against the same month for the year of 2015. The same was true of the Canary Island.
Other highlights included year on year increases for Cataluna, Valencia and Madrid indicating that in major coastal regions and cities the property market continues to recover.
Market trends for 2016
In December, as has been true all year except for one month, the amount of loans being cancelled was greater then new loans being constituted. In December 22,458 loans came of the banks books and 20,747 new loans were added leaving a net decrease of 1,711.
Across the whole year the mortgage market rose both in terms of growth in numbers of loans and capital lent. The growth year on year was not quite as strong as the growth of 2015 over 2014 but has ensured that overall levels now exceed the levels from 5 years ago in 2013. This leaves the market a long way off pre-crisis levels but steady if not spectacular growth at least continues.
In total over 2015 the numbers of loans rose by 14% and capital lent by 17.2%. The total number of new mortgages in Spain exceeded 281.3 thousand. This is in comparison to 2013 when they reached 199.7k.
2013 saw a drop on 2012 when 273.9 new loans completed so 2016 exceeded the best of the years within the last 5 years.
Top performers regionally for the year were Andalucia who at 53,733 new loans was the biggest lending area in Spain and closely followed by Cataluna and Madrid.
Regions that performed above the average in terms of percentage increases included the Canaries, Cataluna and Andalucia. All regions showed some level of growth in the last 12 months.
Mortgages redeemed totaled 309,778 for the year so a net outflow of home loans for the Banks of 28,450.
International Mortgage Solutions yearly results.
IMS as a business saw steady increases in activity across the year reflecting very much the market situation in Spain. Due to the focus being on non resident loans Brexit however hit numbers badly for a couple of months.
Numbers of loans grew 5.8% over 2015 so a small decrease of national market share in terms of numbers of loans, but capital lent grew by 44.8% over 2015 and was well above the national average growth of 17.2%.
2017 has seen a buoyant start with completions for January and February being above those of last year.
What might 2017 hold in store
Banks in Spain will continue to count the cost of losing the floor rate court case and the as yet defined issue surrounding passing on mortgage deed registration costs. These two factors along with net outflows and low interest rates will continue to put pressure on earnings.
Despite a rise in cost of funds Spanish Banks are trying to maintain their fixed rate product levels and attract more applications.
Constant reviewing by the Banks of competitors has seen changes in, early redemption penalty levels for fixed rates, and has the positive affect of bringing these down in general and providing a higher level of transparency.
As property prices have stabilized more lenders are considering 70% loan to value for non fiscal residents .
Compulsory products like life cover continue to be the banks saviour in terms of earnings, given low interest rates, and there is little change in this area or likely to be in the next 12 months.
Variable rate products in the non resident arena continue in general to hold high margins in comparison to the market pre- crisis levels and given the push on fixed rates it is unlikely the banks will launch new more cost effective variable rate products.
For clients at lower loan to values and low debt to income ratios the banks retain the ability ,which cannot happen under English FSA regulations in the UK, to negotiate from their published terms and conditions.