INE: Mortgage Signings Gained Momentum In 2015

26 February 2016 – Cinco Días

The bank’s commitment to the recovery of the mortgage market, following the period of crisis during which time financial entities almost hermetically sealed the credit tap, is reaping its rewards. The signing of new mortgages increased in 2015, for the second year in a row and the rise was significant. In 2014, the downward trend that had lasted for seven years was broken and the number of home loans signed increased by 2.3%; in 2015, that recovery gained momentum, with the growth in new mortgages amounting to 19.8%.

The mortgage war unleashed by the banks undoubtedly contributed to that recovery. The banks have been making their loans increasingly cheaper and the spreads above Euribor now amount to around 1%, when three years ago they rarely fell below 3%.

Fernando Encinar, Head of Research at Idealista, says that we have now seen the second consecutive year of recovery in the mortgage market, “where we have witnessed four main trends: an increase in the number of operations signed, an increase in the average amount granted, a decrease in interest rates – partly due to the decline in Euribor, but also due to pressure on the spreads, thanks to greater competition between banks – and an increase in the number of fixed rate mortgages being signed, although variable rate products still account for the majority of new mortgages. We expect these four trends to continue in the market in 2016, and whereby contribute to the normalisation of the real estate sector. “

According to the provisional data published today by the National Institute of Statistics (INE), the value of these mortgages amounted to €25,934.7 million, up by 24.1% compared with a year earlier. The average value of mortgages granted for homes rose by 3.6% in 2015, to €105,931.

In December 2015 alone, 19,362 new mortgage contracts were granted for the acquisition of homes, up by 21.1% compared with the same month in 2014, for an average amount of €107,880, up by 2.5% compared with December 2014.

By autonomous region, Andalucía (45,971), Madrid (42,382) and Cataluña (38,583) accounted for the highest volume of mortgages granted for homes.

The number of mortgages signed increased in every autonomous region last year. The greatest increases were observed in the Balearic Islands (+41.4%), Cataluña (+25.9%) and Cantabria (+24.9%).

Original story: Cinco Días

Translation: Carmel Drake

Bankinter To Grant €2,000M In Mortgages In 2015

10 July 2015 – Expansión

Bankinter is strengthening its commitment to the mortgage segment as the economic recovery takes off. The entity began to reactivate its commercial offer at the end of 2013, in anticipation of the recovery in the real estate market. Since then, it has positioned itself as one of the most active banks in the recent mortgage war, and that is driving the generation of new business.

According to an announcement made by Bankinter yesterday, the bank accelerated the volume of mortgages granted during the first six months of 2015, signing 5,523 loans in total with a combined value of €906 million. These figures represent an increase of 34% with respect to the same period in 2014, when the bank signed 4,074 mortgages with a total value of €674 million.

Market share

“These figures confirm that 2015 is going to be the best year for the mortgage market since the onset of the property crisis. The strong data means that we expect to close the year having granted new mortgages worth more than €2,000 million”, said Bankinter, which has a share of 6% of the mortgage market. In 2014, the volume of new signings amounted to €1,500 million.

Bankinter has just launched a fixed-rate mortgage, at a rate of 2% over ten years; this will be marketed alongside its variable-rate mortgage (Euribor plus a spread of 1.50%). (…).

Original story: Expansión

Translation: Carmel Drake

Deloitte Strengthens Its Financial-RE Team

22 April 2015 – Expansión

Deloitte hires nine new professionals / The consultancy firm has recruited a team from Quadratia, a company that specialises in the residential RE sector

Deloitte expects to see a boom in the sale of homes and land to overseas funds; and it wants to become a leader in that market. The consultancy firm has recently strengthened its financial-real estate team by hiring new professionals from the specialist company Quadratia. The new recruits include the Managing Partner of that consultancy firm, Gonzalo Gallego, who joins as a Real Estate partner in the Financial Advisory team.

This move comes as a result of the belief that following the purchase of real estate platforms, shopping centres, individual buildings and loan portfolios, the opportunistic funds are going to focus their attention on the residential market this year and next. “We are seeing an increasing focus by real estate investors on the residential market, where they are interested in buying land, homes and other properties on the coast”, said Enrique Gutierrez, partner in the Transaction and Restructuring Advisory team at Deloitte. Gutierrez is responsible for the department where increasing weight is being given to the real estate sector. The RE team at Deloitte is led by the partner Alberto Valls, who Gallego will report into. In total, Deloitte’s Transactions team comprises more than 300 professionals.

Valls explains that, in the same way as has happened with other types of assets, “history is repeating itself and there is a lot of conviction amongst opportunistic investors that now is the time to enter the residential sector”. These types of funds are specialists in acquiring assets that carry higher risk and therefore, represent opportunities for extracting higher returns. “In a year from now, higher returns will be obtained. Once the situation stabilises, other more conservative, institutional investors will enter (the market)”, he adds.

In this context, investors are focusing their attention on banking assets: “(Many of the banks’) balance sheets are still fully loaded with debt from property developers and other foreclosed assets, and there are 400 funds willing to invest in Spain. No other segment has as much potential as the residential market”, says Gallego.

The banks are adopting two approaches to unblock the real estate plughole: the sale of homes in their networks, which accelerated every month in 2014 thanks to the mortgage war; and the sale of portfolios to funds. Deloitte estimates that there have been 30 transactions involving the transfer of (property) developer loans over the last year and a half.

The consultancy firm explains that the banks take three parameters into account when they put these types of portfolios on the market: time, cost and price. If the result of this equation shows that it will be more expensive to foreclose assets in the future than sell them at a discount now, then they put them on the market.

Original story: Expansión (by J. Zuloaga)

Translation: Carmel Drake

Santander Reduces Its Mortgage Spread Further, To 1.49%

18 March 2015 – Expansión

The second reduction of the year / The entity has decreased its spread over euribor on its mortgages from 1.69% to 1.49%, to match ING’s offer.

Santander has reduced the cost of its mortgage once more to place its product amongst the most attractive in the market, as the all out war continues in the sector. For the second time this year, the group has reduced the interest rate on its home loans: the rate paid (by borrowers) during the first year hereby falls from 2.45% to 2%; and from the second year onwards, the spread over euribor decreases from 1.69% to 1.49%.

With this move, Santander is now positioned in line with the strategy of (many of) its competitors such as ING, Bankia and Bankinter, which have all lowered the spreads on their mortgages to around 1.5% over the last month and a half. However, it does not match the rate of 1% being offered by Kutxabank, the lowest in the sector.

To obtain these conditions, clients must hold various products with the bank. Mortgage holders will have to receive their salaries in their accounts with the entity and they must earn a minimum monthly income of €2,000. In addition, mortgage holders must pay three bills (direct debits) from their Santander accounts, use the bank’s cards, and also take out home and life insurance policies with the entity.

Mortgages have become a key product for Santander in its efforts to achieve its main goal: namely, to increase the loyalty of its customers. Mortgage (marketing) campaigns targeted at individuals and Project Advance, which focuses on SMEs are the ‘hooks’ with which Santander is seeking to attract and retain customers in Spain, which currently number 12.6 million.

The entity’s mortgage portfolio in Spain amounts €47,000 million. Although the new loan book grew by 64% in 20134, its total stock decreased by 5.8% last year, from €50,000 million at the end of 2013.

Santander holds a market share of 10.2% in the mortgage sector in Spain, having gained 0.2 points between January and November 2014, according to the latest data presented by the bank. This falls below its market share of the Spanish loan sector (in general), which amounts to 13.5%.

Original story: Expansión (by M. Martínez)

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

Popular, BBVA & Sabadell Have Lowered Their Lending Rates The Most

18 February 2015 – Expansión

«We will have to work up a sweat»: Warned the Chairman of the Banking Association, José María Roldán, at the end of last year, when he predicted that the fierce competition between financial institutions to supply credit to solvent clients in Spain would continue well into 2015.

The economic recovery, the lower cost of financing and the ever declining profitability of fixed income securities are spurring a trade war between the banks, which first took each other on in a battle to provide loans to SMEs and then moved onto mortgages.

In the race to expand their customer bases and secure customer loyalty, whilst at the same time protecting their market shares, banks have reduced the cost of credit in the last year, although the size of the reductions vary a lot between entities, according to information compiled from their respective results presentations.

Popular, BBVA and Sabadell have lowered their lending rates the most in the last year. The entity led by Ángel Ron (Popular) leads the ranking in terms of commercial aggressiveness, with a decrease of 34 basis points, which placed its credit yield at 3.53% at the end of 2014. Even so, its yield remains the highest in the Spanish banking sector.

Next, BBVA and Sabadell have applied a price cut of 20 and 19 basis points, respectively, bringing their interest rates to 3.32% and 2.80% in each case. To a lesser extent, Santander has also made its loans in Spain cheaper (by -6 basis points), and so too have Caixabank (-2 basis points) and Bankinter (by one basis point).

Popular, Sabadell and BBVA also lowered their lending rates during the last quarter of 2014, with respect to the previous quarter, whereas all of the other entities chose to maintain their rates unchanged. In any case, the downwards trend in the price of loans granted by Spanish banks is mitigated by the fact that the overall yield depends on the performance of the whole portfolio and not only on that of new loans.

Bankia is not included in this analysis, because it has not yet presented its results for 2014. It is awaiting notification of the percentage of the charge that the Fund for Orderly Bank Restructuring (the FROB) will assume in the payment of compensation for the claims made against its IPO in 2011.

The banks consider that reducing returns on deposits will continue to offset the lower returns on its loans, and therefore they will avoid any squeeze on their client margins, which is following a slight upwards trend, and will allow them to protect their results from the top of the income statement.

However, the price of retail liabilities is ever closer to bottoming out, and therefore the main challenge facing the banks in the short term is to try to offset cheaper loans with higher volumes during a year in which the total credit balance will remain stable or increase slightly, according to some entities.

In any case, in the second phase of the loan war that has begun this year, price is not the only competitive advantage being offered by the banks; they are also increasingly striving to adapt their products to the needs of clients.

In terms of loans to companies, businesses value the speed of response to their loan requests and in-depth knowledge of their business and needs. In terms of the mortgage offer, the requirement to link them to other indicators and products (payroll, average balances, credit cards, insurance, pensions, etc.) is decreasing and the amount loaned as a percentage of the property value (LTV) is increasing.

Original story: Expansión (by Alicia Crespo)

Translation: Carmel Drake

ING España’s Mortgage Portfolio Increased By 5% In 2014

12 February 2015 – Expansión

ING Direct España increased its client portfolio and balance sheet again last year. The bank was the only entity that managed to increase its mortgage book, with an increase of 5.1% to €9,949 million. It is offering one of the best mortgages in the market, having lowered its spread over Euribor to 1.49%.

The growth in its portfolio of other loans was even more significant; it rose by 29.7% to €961 million. ING Direct launched a new strategy in September 2013 to gain a foothold in the SME segment. As a result, its balance sheet increased by 12.3% to €25,277 million in 2014, whilst its funds and pension plans soared by 45.8% to €4,148 million. Its client portfolio in Spain grew by 7.3% to 3.1 million.

Despite these figures, ING Direct España’s bottom line for the year is unknown, since the Dutch entity does not provide a breakdown of its gains and losses by country.

At the global level, the group made a profit of €1,251 million in 2014, down by 64.7% due to extraordinary items and a change in the perimeter. Excluding the impact of extraordinary items, its net profit amounted to €3,424 million, i.e. 8.5% more than in 2013.

ING finished paying back the aid it received during the crisis (€10,000 million) in 2014, and so it announced yesterday that it will begin paying dividends to shareholders again, with the first payment of €0.12 per share being disbursed in May. Yesterday, ING’s shares increased by 3.62% to €11.62.

Original story: Expansión (by M. Romani)

Translation: Carmel Drake

The AEB Thinks That The Mortgage War Is “Very Positive”

6 January 2015 – Expansión

AEB/ The Chairman of the bankers’ assocation says that the current battle for mortgages indicates that the financial sector is still competitive, despite the concentration of entities.

The on-going battle between banking institutions to offer new mortgages is a clear sign that the system is performing well following the restructuring of the last few years, according to the Spanish Banking Association (Asociación Española de Banca o AEB). Its Chairman, José María Roldán, said yesterday that it demonstates “that we have a competitive financial system. We are seeing a very strong degree of competition, to the extent that opportunities and confidence have allowed, and I believe that this is very encouraging. The most important thing is that the choice of loan is appropriate in terms of risk. All of this indicates that, despite the process of concentration that has taken place, healthy competition is still very much alive”.


Roldán was speaking at the Conference on the Spanish banking sector, organised by the Valencian Institute of Economic Research (el Instituto Valenciano de Investigaciones Económicas or IVIE). In his speech, he said that the most important thing right now is that demand for credit in Spain is returning. “Excessive leveraging has been corrected, in some cases loans have been written off and in other cases they have been refinanced, and so we now have sectors with less debt, which the uncertainties would not allow to commit to any investment projects”, he explained.

Now “we are in a situation in which the banks are fully prepared to finance the process of economy recovery, financing rates are very low and demand for credit is beginning to return. At present, there is strong competition between banks to grant loans. Although that does not mean that everyone asking for a loan will be granted one”.


Nevertheless, he considers that it is “difficult to predict when bank credit (on an aggregate basis) will begin to grow, since it depends on two processes. One, in which economic agents with good financial standing are able to demand and obtain credit, and the other, whereby the agents that are still heavily indebted are continuing to service their debts”.

But he reiterated that “that is not the most important thing. What is important is that demand for credit is increasing and that financial institutions are prepared to meet it”.

Original story: Expansión (by J. Brines)

Translation: Carmel Drake

Increased Mortgage Lending Supports Spanish Property Market Recovery

21 January 2015 – Spanish News Today

Spanish banks regain confidence in real estate loans

One of the various encouraging aspects of the latest figures published by Spain’s notaries for November, in which further indications are shown that the country’s property market is at last achieving stability and even limited growth, is the increase in the extent to which residential property purchases are being financed by mortgage loans.

The notaries report that during November last year 13,857 residential property purchases were made with the aid of mortgages, 35% more than twelve months previously. At the same time, the average amount loaned by banks remained generally stable, falling by just 0.6% to €113,093 on property purchase mortgages (whilst the price of property itself fell by 1.5%).

In general terms, the notaries conclude that 40.6% of all residential property purchases last November were financed by means of a mortgage loan, the highest proportion in the first eleven months of 2014, and that in these cases the loans covered 74.9% of the total price.

It seems that as price stability becomes a reality it is not just purchasers who are becoming more confident about venturing into the market: banks also appear to be reaching the conclusion that the market is now solid enough for mortgages to represent an acceptable risk.

Original story: Spanish News Today

Translation: Carmel Drake

Banco Popular Launches New Mortgage

20 January 2015 – El Mundo

Banco Popular has launched its new mortgage offer into the market, with spreads of around 1.5% for both its branch network and online subsidiary, Oficina Directa. The entity is offering the Hipoteca Premium in all of its branches, with a spread of 1.59% above Euribor. The product has a fixed interest rate of 2.4% for the first year.

Original story: El Mundo

Translation: Carmel Drake