According to Premier Marbella news sources, almost seven out of ten property transmissions were made without mortgage between January and March, according to a report by the General Council of Notaries. The leverage of banks, economic uncertainty and tightening conditions have led to this decline in the number of mortgages approved. Only 32.7% of property purchase transactions in April were with a mortgage. Continue reading
According to Premier Marbella news sources, the Euribor over twelve months, the indicator most used to calculate the price of mortgages in Spain, ended the month of May at 0.484%, a record low which places it in monthly rate below 0.5%, which is price the ECB put the money in the euro area last April. Leading Marbella property specialist Romano Keogh is confident that this news will be most welcomed by property owners with mortgages.
The European Central Bank (ECB) has again lowered interest rates by 25 basis points to 0.50%, now at the lowest level since the euro was born over 10 years ago. This is the fourth consecutive decline in interest rates and the first since July 2012. Reducing the price of money was foreseen by the market and comes at a time of weakness in the European economy and low risk of inflation which in April stood at 1.2%. The only restraint with which the ECB counted on were some statements against this cut that arrived a few days ago from Germany. The fall in interest rates just announced by the ECB is good news for all mortgage holders.
2012 accounted for more than 274,000 mortgages, but nevertheless there were a further 44,000 sales transactions (ie, 319,000). This means that 13.8% of home purchase operations that were conducted in 2012 did not require mortgage financing. By contrast, in 2011 there were more mortgaged purchases and specifically 11.9% more mortgages granted. The demands of financial institutions make a large number of young people unable to access mortgages.
According to the business director of Bankimia, Sergio Fernandez, “we are in an environment of strong credit crunch that makes financial institutions very demanding when granting a mortgage so a large number of young people who are unemployed or in temporary employment are excluded. Another barrier outlined by Bankimia for this group is having to contribute funds of up to 20% of the property value.
With this situation, Sergio Fernandez adds “the return of deposits and other savings products is not very attractive and the price of housing, especially in certain areas and for certain uses (second homes) has decreased considerably during the crisis” opening a door to cash rich investors who can find very attractive offers in the real estate sector.
The Euribor, the indicator that references most Spanish mortgages, has resumed the downward trend that continued in 2012, after the rise experienced in the month of January, which ended with 0.620%. The index yesterday recorded a daily rate of 0.604, compared to 0.622 at the start of the month, noting provisionally a general rate of 0,614. Positioning it at 1,062 points compared to February last year. Last Thursday, the Governing Council of the ECB decided to keep interest rates at 0.75%, which was the minimum set in July 2012.
The number of mortgages in November on housing in Spain fell by 31.6% (annually) to 19,115 units. According to the National Statistics Institute (INE), the figure is similar to that of the previous month and continues in the ‘minimums zone’ since statistics started. The data refers to dates when property sales increased confirming the idea that more and more property is being bought in cash. There was a time when the number of monthly mortgages far exceeded the number of property sales. This occurred because mortgage activity was even higher than the buyer, as there were numerous mortgage transactions that were linked to a purchase (refinancing, for example).
However for some months now the data from the National Institute of Statistics (INE) shows a turnaround. According to the latest data from INE the number of sales was 25% higher than mortgages. In 2007 the situation was reversed, as the number of mortgages was 50% higher sales. The fall in house prices coupled with the increase in spreads on mortgages is prompting more homes to be purchased with cash. This phenomenon is occurring especially in the affordable housing sector, where some buyers may get to purchase without availing of a mortgage (average interest rates grew up to 4.39% in November). This has also allowed the average amount per mortgage is falling less than the price of housing. Thus, the average mortgage fell only by 4% year on year, when property is down over 10%.
The number of mortgages on homes continues to fall, continuing a two and half year trend of decline. In October the number had reached 19,105, representing a decrease of 14.4% over the same month in the year 2011 and marks a new low, according to figures released by the National Statistics Institute INE.
Albeit in its lowest level since the time records began in 2003, mortgages had moderated their year decline until September when they fell by 28.5%. In the first ten months of 2012, mortgages on homes fell by 33.2% over the same period in 2011, a decrease of 38.8% on borrowed capital and 8.4% in average mortgage value.
Spanish housing mortgages reach all-time lows, after falling 32.2% in September. The average interest on home mortgages stood at 4.12%, the lowest since June 2011. The number of mortgages on homes totaled 21,195 in September this year, down 32.2% from the same month of 2011, according to figures released recently by the National Statistics Institute (INE). September’s Inter-annual results show mortgaged homes have reached 29 months of consecutive falls.
The September year on year decline was more pronounced than that of August, when the mortgaged homes were down 28.5%. In addition, the total number of home mortgages is the second lowest in any month in the comparable historical series, which began in 2003. The ‘floor’ of mortgaged homes occurred last August, when 21,106 mortgages were set, 89 less than in September.