Ministry of Development: House Sales Return to Pre-Crisis Levels

1 October 2018 – Voz Pópuli

There is no doubt about it. House sales have been reactivated. The clearest evidence yet is the latest data published by the Ministry of Development. According to the figure, in the second quarter of the year, more than 160,000 homes were sold, which represents an increase of 11.5% YoY. That volume has not been seen since the second quarter of 2007, before the outbreak of the financial crisis, when 227,000 units were sold.

Over the last twelve months, between July 2017 and June 2018, almost 560,000 homes were sold, up by 12.1% compared to the previous twelve months.

All of the autonomous regions recorded increases – in the second quarter – with the exception of the Spanish islands and Ceuta and Melilla. Nevertheless, based on the cumulative figures for the year, all recorded positive results. By municipality, Madrid registered the most sales during the second quarter, with 12,949.

In terms of home type, second-hand homes continued to dominate, accounting for 91% of the total. New home transactions only accounted for 8.5% of all house sales.

Mortgages

After a decrease in March, July brought with it the fourth consecutive monthly YoY increase in the field of mortgages, which exceeded double digits once again. Mortgages recorded three months of decreases with respect to the interest rate, whilst on an annual basis, they have now accumulated a decrease of more than 6%, making it more attractive to take out credit, according to explanations provided by the Head of Research at pisos.com, Ferran Font.

The signing of fixed-rate mortgages also returned to just above the 40% threshold in July, which has only happened twice so far during 2018.

Original story: Voz Pópuli (by David Cabrera)

Translation: Carmel Drake

INE: The Number of Mortgage Signings Soared by 34% YoY in April

27 June 2018 – Expansión

The number of mortgages constituted over homes in Spain amounted to 28,724 in April 2018, which represents an increase of 34.2% compared to the same month in 2017.

According to data published today by Spain’s National Institute of Statistics (INE), the increase with respect to the month of March was 9%. In terms of the cumulative numbers so far this year, the increase amounts to 11.6%.

Meanwhile, the capital loaned rose by 46.5% in April 2018, compared to April last year, to €3.5 billion. Moreover, the average amount loaned in April of this year amounted to €123,256, up by 9.1% in YoY terms.

By nature of property, mortgages constituted over homes accounted for 64.7% of all the capital lent in April.

For mortgages constituted over homes, the average interest rate in April 2018 was 2.67% (16.7% lower than in April 2017) and the average term was 24 years. 60.6% of mortgages over homes were constituted at floating rates and 39.4% at fixed rates. Fixed rate mortgages experienced a 30.7% increase in YoY terms.

The average interest rate at the beginning of a mortgage term is 2.42% for floating rate mortgages over homes (a decrease of 22.3%) and 3.15% for fixed rate mortgages (6.1% lower).

Fernando Encinar, Head of Research at Idealista, considers that the “significant increase in the volume of mortgages registered in April with respect to last year should be adjusted for the effect of Easter, although even taking the sum of March and April in both years, the increase is still a healthy 12%”.

According to him, “the banks are still willing to grant mortgages, they are opening their hands slightly, but they are not the motors behind the rise in house sales. Fixed rate products are rising slightly with respect to floating rates, and so are the prices of them, undoubtedly the result of more expensive financing. Even so, more mortgages are still being repaid than registered”.

For Ferran Font, Head of Research at pisos.com, these data confirm “that in March, we were not looking at a change in trend, but rather the effect of Easter, which fell in April in 2017. That percentage strengthens the growing trend in recent months, after a month of negative YoY growth”.

By region, the autonomous regions with the highest number of mortgages constituted over homes in April was the Community of Madrid (6,018), Andalucía (5,154) and Cataluña (4,700).

Meanwhile, the highest YoY variation rates were recorded in the Balearic Islands (66.7%), the Community of Madrid (62.4%) and Castilla-La Mancha (54.2%).

The autonomous regions where the most capital has been loaned for the constitution of mortgages were the Community of Madrid (€997.9 million), Cataluña (€708.1 million) and Andalucía (€531.8 million).

In total, 40,005 mortgages over properties were signed in April, up by 36.5% with respect to a year earlier. Of the total, 1,350 corresponded to rural properties (+21.4%) and 38,655 to urban assets (+37.1%).

Original story: Expansión 

Translation: Carmel Drake

Registrars: House Prices Rose By 7.7% YoY In Q1

18 May 2017 – El Mundo

Homes are becoming increasingly expensive. House prices rose by 7.7% during the first quarter of 2017 in YoY terms, according to the real estate statistics published by the College of Property Registrars. With respect to the last quarter of 2016 – i.e. looking at the QoQ variation – the increase amounted to 4.1%. With these new increases, the cumulative adjustment since the peaks of 2007 continue to fall and now amount to 22.8%.

On the other hand, 113,738 house sales were recorded between January and March, representing the highest quarterly figure since the first three months of 2011. The increase amounted to 21.8%, with respect to the previous quarter. In interannual terms, the positive trend continued: prices rose by 14.4% with respect to the same quarter in 2016.

On this occasion, contrary to the trend seen in recent years, new house prices performed in line with the general increase, accounting for 18% of the total number of sales, with a significant QoQ rise of 27.5% (20,490 sales), whilst the sale of second-hand homes rose by 20.6% compared to the previous quarter, to reach 93,248 operations.

Purchases by overseas buyers reach peak levels

The weight of house purchases by overseas buyers remained relatively stable during the first quarter of the year to account for 13.1% of all registered sales. That corresponds to sales of around 15,000 properties per quarter. In cumulative YoY terms, foreigners accounted for 13.3% of all purchases, a historical maximum, and corresponding to more than 55,000 house purchases per year by overseas buyers.

By nationality, the British continued to lead the ranking, accounting for 14.5% of all purchases made by foreigners, although their continued fall over the last few quarters (during the previous quarter, they accounted for 16.4% of all purchases made by foreigners) has brought the figure to a new historical low over total purchases by foreigners. The French rose to second place with 9.6%, followed by the Germans (7.7%), Belgians (6.9%), Swedes (6.3%) and Italians (6.1%). These first six nationalities accounted for more than half of all house purchases by foreigners.

Average mortgage amounted to €116,182

Mortgage debt to buy a home increased by 3.6% compared to the previous quarter, to reach €116,182, whilst the number of fixed rate mortgages continued to rise sharply, in line with previous quarters, to account for 38.7% of all new contracts, compared to 31% in the previous quarter, a new maximum in the historical series.

This situation leaves variable rate mortgages at their lowest figure to date, especially, Euribor, which was the reference rate for just 60.3% of all mortgages. The average initial interest rates on new loans decreased slightly to reach 2.3% from 2.4% in the previous quarter.

The terms of new mortgage loans remained relatively stable, recording a slight increase of 0.7% compared to the previous quarter, and an average term of 23 years and four months.

Access to housing saw a slight deterioration: the average monthly mortgage repayment during the first quarter amounted to €536, representing a QoQ increase of 2.2%, whilst the percentage of that repayment over wage costs rose to 28.3% from 27.6%.

Original story: El Mundo 

Translation: Carmel Drake

Tecnocasa: Second-Hand House Prices Rose By 8% In H1

7 September 2016 – El Mundo

The average price of second-hand housing in Spain rose by 7.99% YoY during the first half of 2016, to €1,666/sqm, according to the XIII Report about the residential market, prepared by Tecnocasa and the University of Pompeu Fabra (UPF) using sale/purchase and mortgage data from the real estate company.

Despite the significant increase, this average price is still well below the maximum values that the market reached at the end of 2006 and the beginning of 2007, when the average cost per square metre of second-hand homes amounted to more than €3,500. (…).

The city of Barcelona, which saw a price rise of 9.45%, led the increases during the first half of 2016, followed by Málaga (9.21%) and Madrid (9.03%). In this way, the cost per square metre rose to €2,443/sqm in Barcelona, to €1,044/sqm in Málaga and to €1,835 in Madrid.

In this regard, Tecnocasa notes that “we are seeing a two-speed recovery”, given that prices in cities such as Guadalajara, Sevilla, Zaragoza and Valencia increased by less than 2% (during the same period).

At a press conference held to present the report, the Director of the Department for Analysis and Reports at the Tecnocasa Group, Lázaro Cubero, explained that rental prices are also increasing, in the same proportion, and the average mortgage is also rising (€91,808), which represents an increase of 9.8%, although still represent less than half the lending figures in 2007 (€185,462). In this sense, it is worth remembering that the average monthly repayment amounts to €367.

Cubero stated that prices are still “attractive” – they are 52% lower than they were in 2006 for Spain as a whole – and financing conditions are very favourable, thanks to low interest rates, at a time when vendors are still having to apply discounts to their initial asking prices to achieve a sale.

The CEO of the Tecnocasa Group, Paolo Boarini, indicated that financial institutions are still behaving in a conservative way when it comes to granting mortgages: they are granting 73% of the appraisal value, and “it is very hard for people with temporary contracts to obtain a mortgage; self-employed people also face challenges”.

Meanwhile, for the Professor of Economics at the UPF and the coordinator of the report, José García Montalvo, the increase in the uptake of fixed-rate mortgages is “a significant change in the right direction”. He criticised Spain in this regard, stating that variable rate mortgages do not account for 95% of the total market in any other country, given that this means all of the risk in terms of interest rate fluctuations is transferred to the client. (…).

On the other hand, the Tecnocasa Group brokered 4,327 house sales in Spain during the first half of the year, up by 22% compared with the same period in 2015, as well as 1,445 mortgages, up by 28%, through its network of 465 offices (19.23%) and 2,000 sales agents. (…).

Original story: El Mundo

Translation: Carmel Drake

INE: Fixed Rate Mortgages Enjoy Unparalleled Popularity

29 July 2016 – Cinco Días

The mortgage market is not only on track to recovery, it is proving unstoppable. The enormous and increasingly attractive mortgages being offered by the banks to secure new clients are encouraging homebuyers. And that is being reflected in the figures. According to the property registers, the signing of new mortgages for the acquisition of a home recorded a significant YoY increase of 34.1% in May, to reach 26,579 contracts, an increase that was ten basis points higher than the rise recorded in April (24.6%) and twenty points higher than the increase in March. With the YoY rise in May, mortgages recorded 24 consecutive months of increases.

And the data reveal another important fact to keep in mind. It seems that the firm commitment of the financial institutions to fixed rate mortgages is working, with increasingly more clients choosing that option. 80.4% of the mortgages constituted in May had variable rates, compared with 19.6% that had fixed rates. Just a month before, in April, variable rate mortgages accounted for 85.2% of the total, whilst fixed rate mortgages represented 14.8%. But the increase in fixed-rate loans is unquestionable if we compare the latest figures with those from just a year ago. In May 2015, when 19,732 new mortgages were constituted, 92.8% of them were variable rate and 7.2% were fixed rate. In other words, the proportion of new fixed rate mortgages has almost tripled in one year.

And, in recent months, the financial institutions have shown a greater predilection for fixed-rate mortgages, given the low interest rate environment in which they are operating. And, what’s more, the battle to win clients is still very much alive and kicking, with some entities now offering interest rates of less than 2%. There are several examples: BBVA is offering 15-year fixed rate mortgages at 1.90%. Bankinter is offering 1.80% on its 15-year mortgages and 1.60% on its 10-year products. Meanwhile, Activobank’s promotional mortgage to celebrate its anniversary establishes a rate of just 1.50% over 10 years. (…).

With just two days left of trading before the end of July, the average Euribor rate currently sits at -0.057%, compared with -0.028% in June. Thus, the decrease in Euribor has doubled in just a month. (…).

According to the provisional data for May, provided by INE yesterday, which comes from public deeds signed in the previous months, the 26,579 mortgages that were constituted during the month represent an increase of 12.6% compared with the 23,607 signed a month earlier.

The value of those mortgages amounted to €2,776.9 million, up by 33.1% compared to a year ago and 8.6% higher than in April. The average mortgage loan amounted to €104,480, which represents a reduction of 0.8% compared to May 2015 and 3.6% compared to a month earlier. (…).

Original story: Cinco Días (by M. Calavia)

Translation: Carmel Drake

Pisos.com: House Prices Rose By 1.3% In Q1 2016

5 July 2016 – El Economista

The average price of second-hand homes in Spain amounted to €1,555/sqm in June, which represented an increase of 1.3% compared with December 2015, according to data from pisos.com, which show that the housing market experienced “good health” during the first half of the year.

Nevertheless, according to the CEO of pisos.com, Miguel Angel Alemany, citizens should continue to make a “significant effort” to become home owners, above all, at the beginning of operations due to the amount of savings that they require to cover the non-financed part of their purchases and the additional costs associated with property acquisitions.

“Monthly mortgage payments are more affordable than they used to be”, confirmed Alemany, indicating that fixed rate mortgage are providing borrowers with “more piece of mind” as they are able to enjoy fixed mortgage instalments for the duration of the repayment period. “Although Euribor is negative, fear of a possible increase in that reference index has made people much more cautious”, he added.

By autonomous region, the Community of Valencia (+4.49%), Galicia (+4.14%) and Aragón (+4.10%) recorded the highest price rises during the first half of the year, whilst the most marked price decreases were registered in País Vasco (-2.91%), Cantabria (-2.48%) and Andalucía (-1.82%). Meanwhile, the most expensive region in June 2016 was the País Vasco (€2,740/sqm) and the cheapest was Castilla-La Mancha (€952/sqm).

Original story: El Economista

Translation: Carmel Drake

Bankinter Revives Fixed Rate Mortgage War

9 June 2016 – Expansión

A new battle has commenced in the war between the banks to grant fixed rate mortgages. One of the most active entities in the commercial supply of these products, Bankinter, is redoubling its efforts. Yesterday, the bank announced widespread cuts in interest rates on its 5-, 10-, 15- and 20-year mortgages. Bankinter, whose fixed rate mortgages were already amongst the most competitive in the market, has cut the interest rate on its ten-year home loans from 1.75% to 1.6%; on its fifteen-year home loans from 2% to 1.8%; and on its twenty-year home loans from 2.3% to 2.1%.

The zero interest rate environment in the Eurozone has led the banks to offer fixed rate mortgages, given that 12-month Euribor, which is the index to which most floating rate mortgages are linked, is trading at negative rates (-0.018%). In this context, it is more profitable for the banks to offer fixed rate mortgages, given the limited margin they are able obtain on their variable rate products.

The main advantage for customers is that they know the amount of interest they will have to pay on the day they take out the mortgage; that figure is fixed and will not vary for the duration of the mortgage term. In other words, clients are protected against possible interest rate rises, although they would not benefit from any further hypothetical decreases.

Bankinter’s fixed rate mortgage has an arrangement fee of 1%, with a minimum of €350. It also charges a penalty of 0.5% during the first five years of the life of the loan in the event of its total or partial repayment, and of 0.25% thereafter, as well as a commission of 0.75% to offset the interest rate risk, in the event that the early repayment generates a loss of capital for the entity.

If Bankinter’s fixed rate mortgages are taken out to purchase a primary residence, then the value of the loan may not exceed 80% of the purchase price or appraisal value (the lesser of the two amounts). If the product is requested for a secondary residence, then the limit is 60% of the lower of those two values.

In addition, in order to benefit from these interest rates, the bank requires its borrowers to receive their salary into their Bankinter account, as well as to take out life assurance and home insurance with the entity. The applicable interest rates are higher if these products are not contracted.

The reductions also apply to the fixed element of Bankinter’s 15- and 20-year mixed (fixed and floating) rate mortgages, which decrease to 2% and 2.3%, respectively.

Original story: Expansión (by A.R.)

Translation: Carmel Drake

Sabadell Enters Mortgage War With 20-Yr 3.7% Fixed Rate Offer

16 January 2015 – Expansión

NEW PLAYER / The bank led by Josep Oliu breaks into the mortgage market with a fixed rate loan, as it seeks to revitalise these kinds of operation, which currently have little prevalence.

The war for new mortgages, unleashed on the domestic market in recent weeks, has a new player: Banco Sabadell has decided to enter the fray to increase its market share of new business. And, in addition to offering a competitive variable rate product, it is also inviting customers to take out mortgages with rates that are fixed over the life of the loan, under terms clearly undercut those currently offered by other banks.

The entity led by Josep Oliu finally approved the launch of a fixed rate mortgage product a few days ago; the rate varies depending on the term of the loan. It begins at 3.5% for loans with a 15-year repayment period and increases up to 3.95% for 30-year operations. In between, a rate of 3.7% will apply for 20-year loans and 3.9% for 25-year terms. An arrangement fee of 1% will apply to all loans and their approval will require borrowers to register their payroll and take out a life insurance policy with the entity.

Better conditions

These conditions compare favourably to those offered by other entities, such as Bankinter (4.94% over 15 years), Caixabank (between 5.5% and 6.95% for operations over 25 years) and Kutxabank (3.98% over 20 years). The arrangement fees vary in each case, but all of the entities require borrowers to register their payroll and take out insurance.

The supply of fixed rate mortgages is currently very limited because entities consider that the interest rate risk that they face over the medium-long term is excessive.

But Management at Sabadell believe that low interest rates are going to be with us for some time to come and that in any case, it does not seem that inflationary pressures are going to lead to an excessive increase in the price of money any time soon. As a result, they believe that they can offer fixed rates for the time being, provided those rates reflect the terms of the loans. Such products may be attractive for those wishing to purchase a home since they guarantee the mortgage repayment amount for the whole life of the loan.

Sabadell is not going to market this type of mortgage exclusively; it wants to enter the wider battle for new mortgages (both fixed- and variable-rate) and intends to engage the tennis player Rafa Nadal, with whom the entity has a marketing contract, as a lure to get closer to its customers. This will be the first campaign in which Nadal participates after signing a contract with the entity last year.

The bank has not set a specific target for its fixed-rate mortgages, but it has fixed an internal goal for the signing of new operations: it wants to achieve growth of 40% on its 2014 figures. In absolute terms, that may not represent a very significant number (the bank has not published its results from last year yet) given that the starting point is relatively low. But it is important qualitatively, since it implies that the bank believes that mortgages are making a come back.

Original story: Expansión (by Salvador Arancibia)

Translation: Carmel Drake