Mortgage information for completions in Spain
Junes information for new loan contracts in Spain as published by the statistical office showed the average loan size bounced back in June.
After a significant dip in May down to € 117k the average loan size regained its April levels coming in at € 123.9k.
Actual numbers of new home loans was down slightly from May but due to the larger loan size the actual level of capital increased.
The Spanish lenders lent a total of 3.791.205 million and the numbers of new mortgages in Spain hit 30.600. Over May this was a small decrease of 1.8%.
Capital lent was up 3.9% and the average loan size was up 5.9%.
When looking at the figures against the same month of the previous year the number of new loans was up 3.9%, capital lent up 9.2% and average loan size up 5.1%.
Lending trends for June
The amount of new credit in the market place specifically for the purchase of dwellings dropped below the 60% mark. There was an increase in loans for other purpose and this took a higher share of the total credit lent for the month of June.
Junes trends in terms of increases or decreases over the previous month have varied from year to year so no real conclusion on Junes figures can be made. It is however normal as was the case in 2018 for more capital to be lent in the month of June.
Interest rates showed a very small increase over May but is still down against the rates being offered in 2017.
Interest rates
The average interest rate across all product types was 2.63% based on an average term of 24 years.
60.8% of all new home loans were signed on a variable rate basis with fixed rates making up 39.2% of all new mortgage deed contracts.
The average interest rate total for variable rates was 2.43% and the average interest rate for fixed rates was 3.03% down by 3.5% on the previous month.
Last week the ECB made reference to interest rates unlikely to rise immediately but an expectation that the Euribor will start to increase in the next two years.
At some point this will have an affect on cost of funds and whilst unlikely to affect margins above Euribor for variable rate products may start to affect the level by which fixed rates can be secured.
Compulsory Products
Spanish Banks continue to prop up margins by insisting on compulsory products being linked to pricing and in most instances being linked to getting an approval at all.
Sabadell have been pushing their lump sum premium life cover policies which are the most lucrative and banks who previously did not add life cover like Targo Bank have started to make this a pre-requisite of borrowing.
Life cover in Spain is expensive in comparison to other countries and by making it compulsory to take with the lender will be preventing low cost competition form making significant inroads to the market place.
Possibly only a miss selling scandal or court ruling will change what happens in Spain and this will of course come in the fullness of time.
Madrid has a good month
Regionally the start performer of last year the Balearics has seen a fall against the previous month and year on year both for June and 2018 in total. The numbers are however small so not of any significance to the total money lent in Spain.
Madrid had a very good month in June with the number of new loans rising by 23.2% month on month for June over May and against the same month of last year up 12.3%. Madrid is also the region with the highest overall year on year on year increases in 2018.
Madrid also outstripped Andalucia in numbers of new loan volumes whereas normally it is the other way round.
Banks in Spain increase in mortgage book
Spanish Banks had a very small net increase to their loan books as only 30.000 loans were redeemed or cancelled and 30.600 new loans contracted.
As Brexit fears continue we may start to see a decline in non resident lending and non resident purchases from the UK with many potential buyers delaying decisions until they are sure of the outcome.
It is however noticeable that many applicants still have a view that the property they are buying is in planning for a retirement eventually to Spain. We shall see if their optimism or the normal UK outlook that changes wont affect them finally is the outcome as the months progress.