Tancrede de Pola (OP Columnist)
A SUMMARY of Spanish mortgage market data in the first quarter of the year gives an insight into the nation’s housing market.
An interesting point is that the 12-month Euribor has fallen, which should make monthly repayments cheaper (depending on the type of loan you have taken out).
The rate ended the first quarter well into negative territory at -0.486. This is substantially lower than the -0.266 seen at the same time last year. The Euribor is the base rate against which mortgage interest rates in Spain are set.
The effect for those with annually re-setting mortgages is an €11 a month drop on a typical €120,000 loan taken over 20 years.
The Euribor had actually been edging towards positive territory in the first half of 2020, but steeply fell until hitting a record low in January of this year.
The evolution of the Euribor over the past decade saw it slip into negative territory during the economic crash that followed the financial crisis.
It stayed stubbornly low – good news for people wanting to borrow money – as central banks, more specifically the European Central Bank tried to reboot the money markets.
Just as they seemed to be recovering the coronavirus pandemic again pushed them down.
This means that mortgage rates remain extremely affordable and should help boost the property market.
This affordability is perhaps reflected in the numbers of new residential loans being given. According to the Association of Spanish Notaries, there were 71,275 new residential mortgage loans signed in the first quarter.
This was a rise of 18.7% compared to Q1 of 2020. While last year’s figures show the effects of the lockdown starting, it should be noted that that did not happen until March, so there is a tendency to underestimate the strength of the resurgence in mortgage approvals so far this year.
In fact, the loans market is mirroring the housing market in experiencing a stronger than expected revival, which bodes well for the future of the sector.
Tancrede de Pola (Director)
The Finance Bureau
C. C. Guadalmina, II, Office, 7
San Pedro Alcantara, 29670
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Tel.: 0034 952801401
Mob.:0034 666709743
email: tdp@thefinancebureau.com
