1 July 2016 – La Nueva España
The credit ratings agency Moody’s has forecast that house prices in Spain will increase by 5% in 2016 as a result of the recovery currently underway in the real estate sector, which is being driven, in turn, by improving economic conditions and the lowest mortgage rates since 2011.
The ratings agency explained that the low mortgage rates are due to increased competition within the banking sector and the historically low interest rates set by the European Central Bank (ECB). Euribor, the reference interest rate for mortgages, stood at -0.013% at the end of May.
In this way, Moody’s said that the number of mortgage delinquencies will continue to decline. At the end of December, the rate of mortgage defaults fell below 4.8%, at a time when the average mortgage rate in April stood at 2.03%, its minimum level since 2012.
Nevertheless, the agency explained that the performance and future of the Spanish real estate market will be ”limited” by external economic risks, given the “significant” level of real estate assets that the banks still hold in their portfolios.
“The banks should accelerate the sale of these assets to avoid the risk of oversupply reducing prices in the medium to long-term”, explained the Vice-President of Moody’s, Greg Davies.
Original story: La Nueva España
Translation: Carmel Drake