November Mortgages in Spain
Data issued on the 30th January by the INE for Spanish loans saw a mixed bag of positive and negatives.
Overall the amount of capital lent increased both year on year and month on month but the numbers of new Spanish loans contracted for the purchase of buying a home fell against the numbers of the same month of the previous year.
In total 24,882 new Spanish mortgages were constituted and the average loan size was up from 120.6k in October 2017 and the € 110.8k in November 2016 to a level of 122.7k.
This increased level in average loans sizes was in line with the data suggesting that prices have risen steadily during the year and that the house buying population due to the economic recovery are more likely to stretch themselves than before.
Numbers of new loans was down 3.7% but actual capital lent was up 6.7% this year to last year and 2.4% up on the previous month of October.
Overall with just Decembers figures to report the lending market in Spain has seen a yearly rise of 10.5% on number of loans, 17.7% in level of capital lent and a 6.6% increase in the average loan size.
Lending trends
November 2016 saw a unusually steep increase in the number of loans over the October which goes someway to explaining why the 2017 figures are down from 2016. Normal trends are that November completions are less than Octobers but in 2016 November saw a 13.1% increase over October.
As the yearly trends appear overall positive Novembers figures are just a reflection therefore of unusually high activity for the month in 2016.
Overall new credit flowing into market remained positive and the only other area that might cause concern if it continues is that the amount of credit issued for the purpose of buying a house only just scraped over the 60% level having for the last couple of months dropped below the 60% level and being abnormally low when taking into consideration past performance.
Whether this is just good news for the commercial and semi commercial and development market or a suggestion that residential purchases and financing is slowing a bit is not clear.
Interest rates
Interest rates as an average for home loans in Spain rose slightly in the month. The rates edged up marginally from 2.67% on October to 2.71%.
This was however a fall on the same month of the previous year when rates were 3.16% as an average.
36.5% of all new lending was taken on a fixed rate basis. This kind of percentage seems to be where the fixed rate product types are going to sit as a percentage of all lending. From its lows of only 5% of the market there has been steady growth in the fixed rate market but it has struggled to move to more than one third of the total.
When making a mortgage application, applicants still see to be favouring the variable rate which is lower than the fixed rates due to the very low level of the 12 month Euribor. Against a back drop of no re-mortgage market in Spain this might not in the long term prove to be a wise choice for borrowers.
Murcia one of worst regions
Regionally for the last couple of months the Canary Islands have struggled to reach 2016 levels of activity and remains one of the few regions behind for the full year. The same is true of Murcia and Valencia who are both on the east coast and both suffered more than most from oversupply and a massive drop in employment and purchase prices.
Elsewhere particularly in those regions favoured by overseas investors healthy increases can be seen across the board.
Madrid and Cataluna have overtaken Andalucia in terms of total capital lent but Andalucia remains the region with highest number of new loans contracted during the year.
Spanish Banks suffer loan book losses
Whilst the INE do not report the level of capital that leaves the books of the Spanish Banks the number of net outflow of loans in November was over four thousand so we are as yet to see an ongoing positive trend of more new loans being constituted than redeemed and overall the year will finish with a net outflow.
The potential subsequent loss of linked products as numbers of mortgagees are being lost may still impact on the Banks in Spain for the future months coming and the year of 2018.