Home Mortgage Signings in Spain Increase 29.1%
During the eighth month of the year, 26,583 home mortgage loans were registered with an average lien of 111,488 euros (0.7% more)
The number of mortgages registered on dwellings in the property registers stood at 26,583 in the month of August 2017, 29.1% higher than the same month in 2016, as reported on Friday by the National Institute of Statistics (INE).
This year-on-year upturn, which accumulates four consecutive months of increases, is slightly lower than the one experienced in July 2017, when mortgaged homes increased by 32.9%.
The average amount of mortgages on housing grew 0.7%, compared to August 2016, to 111,488 euros, while borrowed capital rose 30% year on year, to stand at 2,963.6 million euros. In monthly rate (July to August), mortgages on housing increased 6.9%, while borrowed capital fell 0.3%.
The average interest rate for mortgage loans on housing reached 2.77% in August 2017, compared to 3.24% in the same month in 2016, with an average term of 23 years. 59.6% of housing mortgages were variable rate, in contrast to the 40.4% that was signed at a fixed rate. The latter increased by 55.4% in the annual rate.
For mortgages on variable-rate homes, the average interest rate at the beginning was 2.58%, compared to 3.16% for fixed rate mortgages. In both cases, the rates were lower than those registered in August 2016.
Andalusia and Madrid, in the lead
In the Autonomous Communities, those that registered a greater number of housing mortgages in August 2017 were Andalusia (5,877), Community of Madrid (4,471) and Catalonia (3,987).
In the eighth month of 2017, the constitution of mortgages on housing increased in 14 Autonomous Communities compared to the same month of 2016 and went down in Aragón (26.2%), Cantabria (16.9%) and La Rioja (1.2%). The regions with the highest increases were Andalusia (50.2%), Madrid (42.9%) and Galicia (39.2%).
On the other hand, the communities in which the most capital was lent for housing mortgages were Madrid (695.5 million), Catalonia (534.5 million) and Andalusia (504.4 million).
Total mortgages area increasing
According to the data from the statistical agency, during August 2017, 35,772 mortgages were created on rustic and urban properties (including farms), a figure that represents an increase of 20.9% in August 2016. The capital of the mortgages picked up 23.5% in the same month of 2016 to 5,113.5 million euros, while the average amount of the mortgages constituted on the total of properties amounted to 142,947 euros, 2.2% more.
The average interest rate for the total number of properties stood at 2.64%, with an average term of 22 years. For variable rate mortgages, which represent 62.3% of the total, the average interest rate was 2.44% at the beginning, while it stood at 3.11% for fixed rate mortgages.
Changes in conditions
Regarding mortgages with registration changes, in August 2017 they totaled 6,372, 37.3% less than in the same month of 2016. Regarding homes, the number of mortgages that modified their conditions decreased by 38.3%.
Considering the kind of changes in conditions, 5,067 novations (modifications carried out with the same financial purpose) were produced, with a year-on-year decrease of 36.1%. The number of transactions that changed entity (subrogations to the creditor) fell by 45.5%, while the number of mortgages in which the owner of the mortgaged property changed (subrogations to the debtor) fell by 24.6%.
Of the 6,372 mortgages that changed their conditions in August, 40.4% were due to changes in interest rates. After the change in conditions, the percentage of mortgages at a fixed interest rate increased from 8.9% to 14.6% and that of mortgages at a variable interest rate fell from 89.8% to 85%. The Euribor is the type to which the majority of variable-rate mortgages are referenced. After the changes in conditions, the average interest of both mortgages at fixed-rate mortgages fell by 1.4 points, while that of variable-rate mortgages fell by 1.3 points.
The mortgage context may change in the medium term”
“The consolidation of mortgage financing has been one of the key elements of the recovery of the sector. But since the beginning of the year, the different statistics that measure the health of the sector have intensified their pace and confirm the good moment the sector is experiencing,” explains Beatriz Toribio, head of Estudios de Fotocasa. “We hope that this recovery that the market is experiencing is not truncated by the political crisis we are witnessing in Catalonia,” she adds.
Toribio remembers that, in spite of these bulky increases in mortgage lending, we are still far from the levels of the boom years, and she insists that those who are about to sign a mortgage must take into account that “the mortgage context can change in the medium term, since the current level of low interest rates and historical lows of the Euribor will not be perennial, as evidenced by the fact that the ECB will reduce its stimulus policy starting in January.”
In addition to the trend of increasing rates, the person in charge of Estudios de Fotocasa considers that it will be necessary to see “how is the new mortgage law and what conditions it has for the bank, because if the entities consider that they will obtain less benefits with the sale of mortgage products, the credit concession can result affected,” he concludes.