Spanish mortgages grow in March
Data issued this month by both the Notary offices who take there figures from signed loans and the INE who take their figures from registered loans both showed an increase in home lending in Spain for the month.
Year on year the number of loans for the purchase of a house in Spain rose by 16.8% for signed loans and by 20.2% for registered loans.
Average loan sizes dropped in the month falling by around 1.2% but the capital lent increased due to higher levels of activity. The average loan size feel from 115.9 to 114.5 but remained the 2nd highest average loan size for the last 12 months.
New borrowings increased over the month of February, year on year and inter-annually accumulated.
The number of new Mortgages in Spain registered totaled 27,720 and the capital lent exceeded over 3.173 million.
Credit related to house purchases
The amount of new credit flowing into the economy specifically related to lending for the purchase of home rose slightly in March. The percentage in March of all new lending was 61.8% up from 60.6% the previous month.
When comparing March to February figures the number of new loan applications rose by 13.9% the best month on month increase for 5 years and capital lent rose 12.5% month on month when the normal trend is for March to be lower than February.
In an unexpected move BBVA UK arm has announced it has withdrawn from residential lending in both Spain and the UK. Whether this is because they are regulated under UK legislation and see problems post Brexit is not clear. The strategy now for the UK ar id to concentrate on corporate activity.
Interest rates
The amount of new borrowing taken on a fixed rate basis fell very slightly in the month dropping to 35.4% of all new transactions.
Variable interest rates rose by 1.9% over the same month of previous year and fixed rates were 14.7% less than march 2016. Spanish Banks are pushing heavily their fixed rate products which provide very good value for money in the current market.
This competition will explain the large decrease in fixed rate pricing over the last 12 months.
Overall interest rates rose from an average of 3.17% in February 2017 to 3.23% in march 2017.
Canary Islands and Murcia loan levels drop
Regionally Andalusia, Cataluna, Balearics and Valencia who see the most foreign buyers all had a good month and annually are showing healthy increases for the year to date.
In the month Murcia, Madrid and the Canary Islands all performed below the median and Murcia actually showed a small drop from numbers of completions in February.
Annually apart from Extremadura and the Canaries Islands all regions are up year on year. The Canary Islands are showing the biggest annual drop in activity being down 29% on new loans year to date.
Spanish Banks fight for Market share
The amount of Spanish mortgages cancelled within the month was 32,142 so despite a couple of good months with only 27,720 new loans constituted the Banks in Spain suffered a net outflow from their loan books.
In the last couple of weeks we have seen some changes. Banco Popular is suffering still from its backlog of repossessed property and has put itself up for sale.
Slower than most to work through their toxic assets Banco Popular are now suffering the consequences of rash lending from pre- crisis times.
It will be ironic if the Buyer ends up being Bankia who was bailed out by the government and was able to pass all its toxic loans to SAREB the bad bank, when Banco Popular was unable to pass on its problems.
Bankia having removed its toxic debts to SAREB has one of the strongest balance sheets of all lenders and is one of very few lenders that could afford to absorb another Bank.
Lenders who have been slow to move interest rates are also seeing a severe dip in their market share. To this end we are seeing short term special loan offers for loans completing before the end of the summer. Standard pricing is not changing but offers of reduced rates for the next two months are now being offered by some Banks to allow them to grab back some market share.