August to date 2024
What is the situation on Spanish Mortgages in 2024
Mortgages in Spain have been subdued in the first 8 months of 2024.
Loans are behind 2023 levels. Average sizes are static. As a result total capital lent has decreased.
What has happened with Interest rates in Spain in 2024
It remains possible for Spanish Mortgages in 2024, to gain 3.75% fixed for 20 years. For extremely good quality clients. Rates of 3% fixed for 20 years are achievable.
For instance, with lower loan to values. Higher quality of property, along with low affordability ratios. The better the offered rate, for a Spanish mortgage can be as a result.
Margins above Euribor for non resident Spanish mortgage applicants are average 1.5%. Fixed rates of 4% are also highly achievable.
Spanish lenders
Spanish lending institutions remain eager to lend. Whilst Spanish Banks have tightened criteria for Spanish mortgages in 2024. Due to economic uncertainties worldwide. Alongside higher interest rates.
Interest rates have had an impact. The 12 month Euribor has risen from a low of 0%. To a high of over 4%. In August 2024 this has dropped back to 3.56% for reviews and completions.
Because of rising rates for mortgages in Spain, Spanish Banks have been willing to drop margins above Euribor for new loans. Also maintaining good fixed rates. Equally Fixed rates in Spain are fixed for the full term.
Underwriting criteria for non resident mortgages in Spain
Spanish Banks are currently cautious with their calculation of affordability ratios. Building in higher stress rate levels. Also reducing exchange rate levels, they calculate, for earnings not in Euros.
Many lenders have introduced minimum property prices. Focusing on higher quality property. On basis this more likely to hold value in event of foreclosure. This means the borrower of the mortgage in Spain, has a higher embedded financial interest. Therefore more likely to maintain the loan.
Because of this, non resident mortgages in Spain focus on purchases between 150k and 500k. Below this it has become more difficult to find lenders. Particularly at the 70% level. Likewise for purchases above 750k.
Spanish loans of between 100k to 500k are standard. So either side of this range of lenders will be limited.
Nothing is completely precluded and exceptions to norms remain possible.
Non resident Spanish mortgage applicants outside the eurozone
Applicants for a Spanish Mortgage from the eurozone, experience no issues finding a good range of lenders. But applicants from other countries may experience limitations. Borrowers in Spain from the US, and other North American countries. Along with UK residents are still very much part of the target market.
Expats living and earning their incomes in the Middle East and Eastern block countries may be told there are no facilities for borrowing. This is untrue. Although it is more challenging to place an application. Therefore terms and conditions will be less flexible.
Spanish Banks are focused on primary residences or Holiday homes. Multiple loans in Spain are not viewed favorably. Investor or buy to let loans are non existent. Within mainstream lending.
It is possible to buy an investment property in Spain. There will be no restrictions on renting it. Future rental income will not be taken into account. When assessing affordability.
Loans in Spain, from Spanish Banks, are all granted on an interest and capital repayment basis. Only unregulated or private lenders can offer interest only.
So as 2024 progresses. Interest rates decrease. Lending targets are missed. We may see a softening of underwriting criteria. Also an appetite to lend at the lower end of the market.