Residential Mortgages Begin to Level Out After Mortgage Law

3 January 2020 Spain’s banks issued a total of 29,691 residential mortgages in October, a fall of 2.1% compared to the same month of 2018, according to data published by the country’s National Statistics Institute (INE). Issuance, therefore, fell for the third straight month, though the reduction was limited to the two previous months. The value of the average mortgage rose by 1.1% to 129,237 euros.

The average interest rate on residential mortgages stood at 2.50% (5.0% lower than in October 2018), with an average term of 24 years. Variable-rate mortgages accounted for 54.7% of the total, while fixed-rate mortgages made up the rest.

The mortgage law of last year hit the market and experts believe that the issuance is beginning to return to “normal” levels.

En español

Los bancos españoles emitieron un total de 29.691 hipotecas residenciales en octubre, una caída del 2,1% en comparación con el mismo mes de 2018, según datos publicados por el Instituto Nacional de Estadística (INE). Las emisiones cayeron por el tercer mes consecutivo, aunque la reducción se limitó comparado a los dos meses anteriores. El valor de la hipoteca media aumentó un 1,1% a 129.237 euros.

La tasa de interés promedio de las hipotecas residenciales se ubicó en 2.50% (5.0% menor que en octubre de 2018), con un plazo medio de 24 años. Las hipotecas a tasa variable representaron el 54.7% del total, mientras que las hipotecas a tasa fija constituyeron el resto.

La ley de hipotecas del año pasado sacudió el mercado en 2019. Ahora los expertos creen que la emisión está comenzando a volver a los niveles “normales”.

Original Story: El Boletin – E.B.

Translation/Summary: Richard D. Turner

Congress Agrees that the Banks will Pay All Mortgage Costs, Except the Appraisal

13 November 2018 – Expansión

The political parties today agreed by majority that the new Mortgage Law will establish that notary expenses linked to the signing of mortgages will be paid by the banks and that the appraisal costs will be paid by customers.

Moreover, the notaries will carry out a questionnaire with each borrower to ensure that he/she understands all of the clauses in the mortgage contract, at no additional cost.

The Mortgage Law was presented again today at the Congress’s Economy Committee after the Government approved a royal decree law which stipulates that the Documentation Registration Tax (AJD) will be paid by the banks and not by customers.

The new Mortgage Law reflects that decision and makes it clear that the financial institution will pay for the first copy of the notary deeds; the customer will cover the cost of any copies he/she requests. Meanwhile, the registry costs will also be paid for by the bank; and the borrower will pay the appraisal expenses since he/she will be able to choose the appraisal company freely.

Nevertheless, several other important issues still need to be agreed, such as those relating to early repayment fees, late payment interest and the early termination clause of mortgages and which allows the foreclosure of homes depending on the debt that has been acquired by the borrowers (…).

On the other hand, the political parties will also have to decide about the entry into force of the new standards, given that the financial sector is asking for a margin of 6 months versus the 15 days that the draft bill is proposing.

The Mortgage Law, which is a transposition of a European directive, seeks to provide greater protection for consumers and promote transparency in the granting of mortgages, which is why the political parties have agreed that appraisal companies can be independent physical persons or legal entities (…).

Original story: Expansión

Translation: Carmel Drake

Spain’s Mortgage Market Heats Up, Led by Madrid & Barcelona

16 February 2018 – Eje Prime

The mortgage market in Spain is heating up again starting with its traditional strongholds: Community of Madrid and Cataluña. During the 11 months to November, those two regions, together with La Rioja and Cantabria, saw the highest increases in the number of mortgages constituted in the country.

Whilst Congress is still processing a new Mortgage Law, which looks set to introduce important increases in guarantees and transparency for bank users, the number of mortgages is picking up again across the country, with almost 401,000 operations formalised during the first eleven months of last year.

Between January and November, 69,885 new mortgages were signed in the Community of Madrid, according to data from Spain’s National Institute of Statistics (INE). That figure, the second highest in Spain (after Andalucía, the most populated community) represents an increase of 15.7% compared to the same period last year.

In the case of Cataluña, 61,831 mortgages were constituted, up by 10.5% compared to the first eleven months of 2016. Both regions outperformed the evolution across Spain as a whole, where the number of mortgage contracts signed increased by 7.8% between January and November last year.

Nevertheless, the rate of growth in both Cataluña and Madrid was surpassed by La Rioja, which saw an increase of 26.8%. Cantabria also performed well, with a 15.4% increase in the constitution of mortgages during the eleven months to November. Aragón, the Canary Islands, Extremadura and Navarra all saw decreases in the number of mortgages constituted in the period from January to November.

In addition to a rise in the number of mortgages, the average amount of mortgages is also gradually recovering. In November, for example, the average mortgage in the Community of Madrid amounted to €216,137 (the highest amount in the country given the more expensive house prices in that region), up by 9.8% compared to a year earlier. In the case of Cataluña, the average mortgage amounted to €166,191, up by 17.3%.

Far from the pre-crisis levels 

Although the tone of the mortgage market in Spain is recovering, the magnitudes are still well below their pre-crisis levels. In 2006, for example, more than 1.7 million mortgages were constituted in the country between January and November, for a higher average amount.

Since 2006, the average amount of mortgages in the Community of Madrid has fallen by 58.5% and, in the case of Cataluña, the decrease amounts to 58.5%. It just so happens that the decreases in both regions have been lower than the reduction across the country as a whole, where the average mortgage is now 78% lower than it was in 2006.

Original story: Eje Prime (by Jabier Izquierdo)

Translation: Carmel Drake