February Decline in Mortgage Signing (33%) Marks 46 Months of Fall

28/04/2014 – Expansion

The year-on-year decline registered in February concludes the 46th consecutive month of slump and shows by 0.6% poorer performance than January´s with 32.4% score.

According to the Mortgage Statistics drawn by the National Institute of Statistics (or INE), an average mortgage loan was equal to €102.443, that is by 1,1% less than a year before, while the lent capital shrank by 33.7% to almost €1.7 billion.

In regard to January, mortgages diminished by 6% posting the second biggest drop after 2012´s fall of -9.9%. Lent capital declined by 5.2% in monthly terms.

February witnessed granting 25.573 loans on rural and urban land (the latter included houses and apartments), by 32.9% fewer than in the same month in 2013.

Capital granted for mortgages fell by 11.6% year-on-year to nearly €3.8 billion, while an average amount of mortgages on rural land rose by 31.7% in regard to February 2013 to €147.928.

The biggest number of new mortgages was signed, naturally, in Madri(3.449 contracts for total of €485,4 million), Andalusia (2.651 for €225.6 million) and Catalonia (2.391 for €272.4 million). 

All Spanish regions saw mortgages tapering down, except for Extremadura that registered 4.1% more of them in year-on-year terms (331 loans). The most abrupt drop-off hit Cantabria (-58.6%) and Aragon (-54.6%).

Experts agree that for broader view we need to wait for figures from March and April. As they say, the numbers are alarming due to the cancellation of tax benefits and rise in VAT introduced at the end of 2012.

However, at the end of 2013, there appeared new mortgage offers and althought the progress may be slow, it will creep on and influence the statistics. Moreover, nowadays significant percentage of transactions is being carried out in cash, especially in case of foreign buyers. Statistics also show that Spanish household wealth rate has slightly advanced and therefore one may soon expect rebound in new mortgage signing.

Original article: Expansión (by Marga Castillo)
Translation: AURA REE

Original Story:

Translation/Summary: aura