April Mortgages in Spain
Aprils Mortgages in Spain completion figures showed a marked drop from both the same month of the previous year and the month of March 2016.
In total the number of new loans constituted and registered at land registry within the month fell by 11.4% when compared with April of 2016.
In March 2017 a total of 27,720 new contracts were signed and this dropped to 21,163 for loans made for the purchase of a home in April. This was a drop of 23.7%.
Average loans sizes fell for the second successive month leaving total capital lent down by 24.7% against the previous month. Whilst the average loan size feel against March it remained 5.4% higher than April of 2016 leaving a decrease of total capital lent down but only by 6.6%.
Market has stagnated
Due to the bouyant start to January, February and March the year on year figures still remain above the same time for the previous year but it is a little worrying that for two months now the market has not continued to grow.
There are a number of factors that could be affecting house sales and lending growth. Brexit has had an impact on how many UK buyers are ready to commit to buying in Spain. Whilst the Spanish economy continues to show steady growth and a decreasing level of unemployed there is concern that these levels may not be sustained which may be causing some of the indigenous market to hold off making any new commitments.
Buyers outside of Europe have seen their currencies fall against the Euro and whilst the biggest impact is the euro to sterling fluctuations the dollar has also seen volatile times as Donald Trumps presidency has taken hold.
Spanish Banks vie for home loans
Buyers have seen prices start to edge up and whilst this could be a sign that the property market has recovered and the prices have hit rock bottom the level of stock still outstrips demand so it may well be potential buyers feel that the increases in price are not stable and that bargains if you hold off may as yet still be the name of the game.
There has also been some growth in the number of new properties being built so some buyers will have switched away form resales toward new builds which are not as yet complete so are not able to be mortgaged at this point.
Banks in Spain themselves have larger targets this year for purchase loans and are actively promoting lending. Fixed rates have dropped yet again in an effort to kick start the market despite a higher cost of funds but at this present moment in time this does not appear to be pushing up volumes.
Most telling in the month of April was the share of credit flowing into the system that was designated for home loans. In March this made up 61.8% of all credit and this dropped to 54.6% in April.
With no re-mortgage market Banks are reliant on new purchases.
Interest rates
The average overall interest rate on new contracts was 3.24% in April up from 3.23 in march but this was due to the average variable rate increasing as fixed rates fell. In April last year the average interest rate was 3.20%.
Some lenders dropped their best buy fixed rates in April whilst others nudged them up slightly.
Fixed rates made up 39.3% of all new loans taken up from March and a considerably higher percentage than the level of fixed rate mortgages in 2016.
All regions see a decrease in capital lent
All regions saw a decrease in numbers of loans granted in April when compared to March and only Madrid and Andalucia saw very marginal growth when compared to April of last year. Both regions however saw a drop in capital lent due to a decrease of average loan size in the Month.
The whole region of Murcia only completed on 490 new home loans and places like the Balearics saw a drop from March of 1040 Spanish Mortgages down to 624 new loans in April.
Net outflows for the month were 2,661 which given the level of new loans dropping was not as wide a gap as it could have been. This suggests that whilst not so many people are taking out purchase mortgages so the market has stagnated a bit neither are so many loans going bad or being redeemed early.