Mortgages in Spain first quarter 2024
Mortgages in Spain first quarter 2024 decreased against last year. Also property sales in Spain were a mixed bag. Decreased mortgages in Spain for non residents has contributed.
House sales in Spain for March were up 15%. However year to date they are down 19.3%.
New Spanish Mortgages
In March the total number of new Spanish Mortgages, for the purchase of a home was 29.653. This was a big drop from February. Decreasing by 20.4%. Against the same mon th of 2023 there was also decrease of 18.1%.
For the full quarter year on year the numbers are down 8.3%.
The average loan size in March 2024 was 137.169. This was up marginally by 0.8% over February. Down 3.5% over March 2023.
Interest rate trends in Spain
Interest rates rose marginally in the month. Up 2.3% over February. Rates on average were up 14.4% on same month of last year. The average rate was 3.41%. Of this fixed rates were 3.64% on average.
Over half of all new Mortgages in Spain completed on a fixed rate basis.
There is a high expectation that in June the ECB will bring the base rate down by 0.25%. The meeting is on the 6th June. The market was given strong indication at the last meeting that this would be the strategy. However worse than expected inflation figures is causing some concerns.
High interest rates is dampening demand for loans in Spain. Many potential mortgage applicants are holding off making decisions to purchase. Until they see an overall decrease in rates.
Fixed rate products
However despite the high level of variable rate, fixed rates as a mortgage product type in Spain, can still be gained at 3.75%. For a 20 year term. Whether as rates fall the fixed rates start to reflect this remains to be seen. They did not really rise in line with overall rate hikes. Spanish Banks may therefore not adjust their fixed rate offerings quickly.
Spanish Banks profitability
Unlike a number of their European competitors Spanish lenders are making good margins. This is mainly due to much lower payments on deposits than Banks in other countries have been forced to provide.
Variable margins have fallen during the current environment. On average for non resident lending to 1.5%. From 2% previously. However variable rates remain at present above 5% due to the high 12 month Euribor.
The Bank of Spain stated in May that expect Spanish mortgage lending to fall through 2024. Due to subdued demand and rising defaults. Rising unemployment and world economic affects on foreign buyers will play there part.
BBVA and Sabadell potential merger
BBVA last month raised again the possibility of merging with Sabadell. This was mooted 4 years ago but no terms and conditions agreed. For BBVA a merger with Sabadell would consolidate their position to rival Santander. Provide a stronger footing in UK. Also bring economies of scale.
On the announcement however BBVA share value fell, but Sabadell’s rose. Whether a merger will finally happen this year is difficult to predict. For sure it still remains on BBVAs agenda.
The announcement gave rise to market speculation about further mergers in Spain. Despite this most medium sized Spanish Banks remain very profitable. Therefore not under pressure to do so.
