Tag: fixed rate

INE: Mortgage Lending Rose by 9.7% in 2017

28 February 2018 – RTVE

The signing of new mortgages for the purchase of homes grew by 9.7% in 2017 with respect to the previous year and reached 310,096 contracts, whereby closing its fourth consecutive year on the rise, after falling non-stop over the previous seven years, since the start of the crisis.

According to provisional data published on Wednesday by Spain’s National Institute of Statistics (INE), the value of all of the new mortgages constituted in 2017 amounted to €36.2 billion, up by 16.6% compared to the previous year, whilst the average amount loaned grew by 6.3% to reach €116,709.

In December alone, 20,681 new mortgage contracts were constituted to buy homes in Spain, a similar figure to the one recorded in the same month in 2016 but almost 17% lower than the figure recorded in November 2017, according to INE.

The average interest rate decreased by 13.5%

At the end of 2017, the average interest rate of mortgages constituted to purchase homes was 2.73%, down by 13.5% compared to December 2016, with an average term of 23 years.

62.5% of the residential mortgages constituted were variable rate products and 37.5% were fixed rate deals. The number of fixed-rate mortgages increased by 4.9% compared to the end of 2016.

The average interest rate at the beginning of a mortgage term is 2.54% for variable rate residential mortgages, down by 18.6% compared to a year earlier. Meanwhile, fixed-rate mortgages have an average rate of 3.13%, down by 3.5% compared to those signed a year earlier.

Greatest increases in Andalucía, Madrid and Cataluña

In terms of the distribution by autonomous region, the areas that recorded the highest number of residential mortgages constituted during 2017 were Andalucía (60,240), the Community of Madrid (56,644) and Cataluña (49.918). The regions where the most capital was lent for the constitution of mortgages were the Community of Madrid (€9.287 billion), Cataluña (€6.894 billion) and Andalucía (€5.898 billion).

The signing of mortgages to purchase homes increased in all autonomous regions last year. The greatest increases were recorded in La Rioja (up by 18.4%), the Community of Madrid (+16.6%) and Asturias (+12.4%). Meanwhile, Aragón (+0.5%), Navarra (+0.7%) and Extremadura (+2.0%) saw the lowest increases.

In addition to mortgages for buying homes, the number of mortgage loans constituted for buying estates in general also rose. In total, during the whole of last year, 429,082 mortgages were signed, up by 7% compared to 2016. The number of mortgages constituted to buy rural estates decreased by 1.6% to reach 16,485 contracts.

The total capital lent for those loans amounted to €60.7 billion, with an average mortgage ticket of €141,445 (up by 5.8%).

Original story: RTVE

Translation: Carmel Drake

Socimi Vitruvio Signs €19M Loan With Abanca

5 December 2017 – Eje Prime

The Socimi Vitruvio has paid off an outstanding debt with a new loan. The company has subscribed a financing contract amounting to €19 million with Abanca. According to explanations provided by the group, the funds will be used to repay the debt resulting from the merger by absorption of Consulnor.

The debt assumed following the merger with the real estate company Consulnor amounting to €12.7 million will be paid off thanks to this new loan. The Socimi will also proceed to cancel the line of credit granted by Banco Santander amounting to €4.6 million.

The new loan with Abanca has a two-year grace period (until 30 November 2019) and a monthly repayment schedule of 14 consecutive instalments. The interest rate that Vitruvio will pay will be fixed at 1% during the first year, before rising to 1% plus 1-year Euribor from November 2018 onwards. The loan is due to mature in December 2031.

At the end of 2016, Vitruvio and Consulnor Patrimonio Inmobiliario (CPI) signed a merger agreement whereby CPI, a real estate investment vehicle created by Consulnor (the manager in which Banca March holds a 48% stake), transferred its assets to the Socimi in exchange for shares.

After closing the operations involving CPI and Madrid Rio, Vitruvio plans to undertake new investments amounting to more than €30 million this year.

Original story: Eje Prime

Translation: Carmel Drake

Gov’t Approves New Mortgage Bill That Favours Borrowers

7 November 2017 – Inmodiario

The Government has approved the Mortgage Bill, which transposes the corresponding European Directive and seeks to increase the transparency of mortgage contracts, according to explanations provided by the Minister for the Economy, Industry and Competitiveness, Luis de Guindos (pictured below, left).

In terms of the transposition, De Guindos said that the legislation has opted for the alternatives that are most favourable for the mortgage holder in every case. In this way, commissions for the early repayment of variable rate loans will be reduced, and even cancelled from the fifth year onwards; a maximum commission (cap) will be set for fixed-rate loans, compared to the current situation where up to two commissions may be applied, one of which has no kind of limit.

Moreover, the legislation establishes the right of consumers to change the currency of a loan taken out in a foreign currency to the domestic currency or any other; plus it prohibits cross-selling – which obliges the consumer to contract a series of financial products as conditions to obtaining a mortgage – and it regulates the legal framework for mortgage brokers.

The Ministry of Economy has said that the bill is not limited to simply transposing the EU Directive, but also responds to legal rulings that have expressed the need for greater transparency in terms of mortgage regulation.

In this sense, the legislation facilitates the conversion of variable rate mortgages to fixed-rate products, for both new mortgages as well as those already underway. The commissions for making such a change will be cancelled from the third year and the notary and registration fees will be reduced.

Other changes mean that the lender must provide the client with detailed documentation about the mortgage, including the most “sensitive” clauses and scenarios showing the evolution of instalments. Moreover, the borrower will be entitled to receive free advice from the notary about the contents of the contract for seven days prior to signing.

The legislation also regulates the early repayment of loans, “in such a way that it avoids any kind of discretion when it comes to agreeing this clause”, according to Luis de Guindos. The requirement for a financial entity to be able to initiate the foreclosure of a mortgage is extended to nine unpaid monthly instalments or an amount that exceeds 2% of the capital granted during the first half of the mortgage term; and 4% or twelve unpaid instalments during the second half.

Original story: Inmodiario

Translation: Carmel Drake

Bankinter Reduces Interest On Its 10-Year Fixed Rate Mortgage To 1.75%

19 April 2016 – Expansión

Bankinter has lowered the interest rate on its fixed rate mortgage to 1.75% over 10 years, the most competitive rate in the market, and to 2% over 15 years.

Euribor’s entry into negative territory and the continuous decrease of the index, which is the reference rate for most mortgages, has led the banks to step up their commitments to fixed rate mortgages in recent months. Bankinter, which was already offering the cheapest product in the market, has taken a new step in this commercial battle with an additional reduction in the rate of its fixed rate mortgages.

This reduction, which is the third in seven months, takes the interest rate on 10-year fixed rate mortgages to 1.75%, down from 1.8%. The entity chaired by María Dolores Dancausa has also decreased the rate on its 15-year fixed rate mortgage from 2.1% to 2% and on its 20-year mortgage from 2.5% to 2.4%. (…).

Other products

BBVA is the other entity that has strongly backed the fixed rate mortgage segment, which tend to have shorter repayment periods than their variable rate counterparts. The interest on its 15-year fixed rate mortgage is 1.9%, the lowest in the market over that term. (…).

Bankia…is also offering a 10-year fixed rate mortgage with an interest rate of 1.9%, as is Banco Cooperativo Español.

Translation: Expansión (by A. Roa)

Translation: Carmel Drake

50% Of Banco Sabadell’s New Mortgages Are Fixed Rate

1 April 2016 – Expansión

Strategic commitment / The entity, which held its General Shareholders’ Meeting yesterday, considers that we are facing “an historic opportunity” for clients to protect their mortgage contracts.

Banco Sabadell’s message was convincing on Wednesday, when it explained to Spanish customers that they are facing an “historic opportunity” to shield the interest rates on their mortgages for at least 20 years by taking out fixed-rate mortgages. That was the message from both the Chairman and CEO of the entity, Josep Oliu and Jaume Guardiola (pictured above), respectively, at a press conference ahead of yesterday’s General Shareholders’ Meeting.

Guardiola announced that more than 50% of Sabadell’s new mortgage loans are now being taken out with a fixed interest rate, a trend that he believes will continue to increase, given that Euribor is at historic lows and therefore, has significant potential to increase and little margin to decrease. The executive said that the bank recommends all of its clients to take out this type of mortgage and also advises holders of variable contracts to move across to the new product, even if their spreads are low. (…).

Sabadell has been one of the Spanish banks that has most heavily backed this product, and it says that there is still a reduced supply in the market. The entity is currently offering mortgages with fixed interest rates of 2.70%, 2.50% and 2.15%, depending on whether its clients take out their mortgages for a 30 year, 20 year or 10 year term, respectively. Meanwhile, BBVA is offering 2.25% rate over 20 years and 2.75% over 30 years; and Bankinter is offering 2.10% over 15 years and 2.50% over 20 years. (…).

Dividend of €0.07

Sabadell was also due to submit to its shareholders the approval of the distribution of a dividend amounting to €0.07, which would represent a pay out of 53% and a yield of 4.3% based on the year end share price at 31 December 2015. (…).

In 2015, Sabadell made a profit of €708 million, up by 90.6%. The General Shareholders’ Meeting was also expected to approve a long-term bonus linked to the evolution of its share price until 2019 to incentivise 482 directors.

Original story: Expansión (by S. Saborit)

Translation: Carmel Drake

INE: Mortgage Lending Rose By Just 7.1% In October

22 December 2015 – Cinco Días

The signing of new mortgages to purchase homes increased by just 7.1% YoY in October, down from 20.2% a month earlier, with 19,195 new mortgage loans constituted in total.

According to data published yesterday by Spain’s National Institute of Statistics (INE), the signing of mortgages decreased by 19.4% compared with the month of September, which affected the YoY statistics.

The total amount of mortgages granted to purchase homes in October amounted to €2,144.2 million, up by 18.7% compared with the same month in 2014 and down by 18% compared with the previous month.

Moreover, in October, 28,989 mortgages were signed for all kinds of properties, including both rural and urban buildings, up by almost 5% compared with a year earlier, but down by 19.5% compared with the previous month.

The amount of capital loaned by Spanish institutions to constitute these loans amounted to €4,040 million, 12.5% more than in October 2014 and 15.6% less than in September.

More than half of all of the mortgages constituted in October, specifically, 53.1%, involved homes, according to INE’s data, which also revealed that 90.3% of the loans had variable interest rates, versus 9.7% which had fixed interest rates.

Euribor was the preferred reference rate for the constitution of variable rate mortgages, specifically it was used in 92% of all new variable rate contracts. The average interest rate, at the beginning of the mortgage terms, for home loans was 3.30%, which was 8.2% lower than during the same period in 2014.

In total, changes to the conditions of 12,457 mortgages were recorded in the property registers, down by 18% compared with last year. For homes, the number of mortgages whose conditions were modified decreased by 19.4%. (…).

By autonomous region, the areas that recorded the highest number of new mortgage constitutions over homes in October were: Andalucía (3,551); Cataluña (3,138) and the Community of Madrid (3,033).

The autonomous regions that recorded the highest YoY rates of change were the Balearic Islands (61.8%), País Vasco (43.7%) and the Canary Islands (32.8%).

The autonomous regions that loaned the most capital for the constitution of mortgages over homes were the Community of Madrid (€513.0 million); Cataluña (€388.5 million) and Andalucía (€335.0 million).

The autonomous regions with the highest month on month positive rates of change in the number of home loan mortgages were La Rioja (19.1%); Murcia (12.1%) and the Canary Islands (9.7%).

Meanwhile, the autonomous regions that recorded the highest MoM decreases were the Community of Madrid (38.7%); Navarra (36.2%) and Aragón (30.4%).

Original story: Cinco Días

Translation: Carmel Drake

Kutxabank Stirs Up The Mortgage War With A 2.5% Fixed Rate Product

12 March 2015 – Expansión

Kutxabank launches one of the best offers in the market / The Basque entity enters the battle started by Sabadell and CaixaBank and seeks to foster loyalty from its customers.

Kutxabank continues to embroil itself in the mortgage war that has been unleashed in the Spanish financial sector, which is showing the first signs of economic recovery. Two months after the launch of mortgages offering rates of Euribor + 1%, the bank comprising the former Basque savings banks BBK, Kutxa and Vital, has now launched one of the most attractive fixed rate offers in the market: a 30-year 2.50% fixed rate product.

According to the entity, its proposal is the “most attractive” in the market because, not only is it offering a reduced interest rate, also this rate will remain unchanged throughout the life of the loan. The nominal interest rate (‘tasa nominal’ or TIN) of 2.50% represents an annual percentage rate (APR, ‘tipo annual equivalente’ or TAE) of 3.28%, according to the new calculation rules, which include various expenses.

Currently, several institutions are embroiled in the fixed-rate mortgage war. Sabadell is offering a nominal fixed rate mortgage at 3.25% (4.18% APR) over thirty years and at 2.90% over twenty years, and CaixaBank has loans at nominal rates of between 2.50% and 3%, depending on the other products held by the customer, and with no set-up fees. Other banks, such as Bankinter, Bankia and BMN are also offering fixed rate mortgages with interest rates of between 3.4% and 4.6%.

Just like with its variable rate mortgages, Kutxabank is looking to foster loyalty from its customers and achieve maximum links (with them) through this aggressive offer . As such, the entity requires them to have their salaries, which must amount to at least €3,000/month, paid directly into their accounts; make payments with the bank’s cards amounting to more than €3,600/year; make contributions to pension plans or social welfare institutions of more than €2,000/year, and take out life assurance contracts with Kutxabank. The set-up fees for the mortgage will be 0.25%, with a minimum charge of €400.

According to the Basque entity, fixed rate mortgages “provide greater security and stability” for customers, as they allow them to know what their instalments will be, at all times, regardless of (variations in) interest rates (in the wider market).

Kutxabank has a 35% share of the mortgage market in the País Vasco and almost 70% of its total loan book is concentrated there, amounting to €31,000 million. The bank is working on the assumption that the mortgage market is in full recovery, after increasing its home loans by 24% in 2014.

Original story: Expansión (by M. Á. F.)

Translation: Carmel Drake