What´s happening in the Spanish mortgage market? 

15 11, 2019

The good news for everyone with a mortgage, or applying for one, is that interest rates have dropped yet again. The Euribor rate, which is the base rate used to calculate mortgage payments, was at -0.339 in September. This is a double drop since the same time last year, when it stood at -0.166. It means that when your Spanish mortgage goes through its annual reset, mortgagees should see a welcome monthly saving in their repayments.

The Euribor has been in negative territory since the beginning of 2016, thanks to the European Central Bank’s monetary policies, and it is fair to say that the bank’s governor, Mario Draghi, is anxious to keep the rate as low as possible, so it is therefore unlikely to increase by much in the near future.

The volume of loans
Data from The Association of Spanish Notaries indicates that new loans for residential properties were up by 23% in August over the previous year, and that the average value of a loan stands at €133,116, a rise of 4.6%. However, mortgage lending is down by just over 20%, and it looks like the new lending figures for Q3 when published will show a lower year-on-year figure.

We have seen mortgage lending volumes rise since 2014, although the figures are still below those for 2007. We also know that in the current climate at least 50% of buyers are looking for a mortgage, compared with only 30% in 2013. This also tells us that unlike what we witnessed in the years immediately before the crash, there is unlikely to be another credit-fuelled property boom for quite some time.

Given the ECB’s monetary policies, which are “intended to keep the wheels from spinning off the Eurozone economy,” as Spanish mortgage expert Mark Stücklin puts it, it seems reasonable to say that Spanish mortgages are on course to stay even more affordable. This is of course excellent news for buyers and for the property market in Marbella, and will do much to offset property prices, and make homes more accessible to a broad range of the market.

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