Spanish banks relaxing lending criteria

March 14, 2010 – 11:28 am

Spanish banks begin to relax lending criteria

Spanish banks begin to relax lending criteria

Spanish Banks are slowly relaxing their lending criteria, with one or two offering more attractive deals and higher LTVs. A spokesperson for Kyero explained: “Most banks use a debt / income ratio of either 35% or 40%, although we work with one bank that uses 50%. This really helps those clients who struggle to get mortgages elsewhere due to having a higher ratio of regular outgoings on mortgages, loans, credit cards etc. to net disposable income (the “debt / income ratio”).

“The interest rate is as low as Euribor (annual) + 0,66% (the lowest we have come across to date), with 0,5% bank opening commission and 0% redemption penalty for partial redemption”.

The eurozone base rate has remained at 1% for some time now, meaning that borrowing in Spain is still cheap. With the recovery in Germany faltering and ongoing problems in the so-called PIIGS group of countries (Portugal, Italy, Ireland, Greece and Spain), it is very unlikely that there will be a sudden hike in rates. This more relaxed attitude may help the property market in Spain, Tenerife and the Canary Islands.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , | Comments (0)

Opportunities available in Spanish real estate

January 7, 2010 – 5:03 pm
The latest news from Spain and Tenerife's Euribor and mortgage situation

The latest news from Spain and Tenerife's Euribor,mortgage and property situation

Mikel Echavarren, an experienced professional in touch with many different companies in the property sector  is worth listening to. Here is a selection of his recent comments

Do you think there are any good investment opportunities in Spanish real estate today?

I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?

There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?

House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%.

What’s wrong with the official statistics?

They are based on valuations. One has to look at real property transactions and a survey of developers to see not only their asking prices but how far they are prepared to drop prices to sell.

Do you think there is any residential property that will never sell?

What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrialsOn the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?

Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?

The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , , , , , , , | Comments (0)

Latest interest rates and mortgage news from Spain and the Islands

January 2, 2010 – 12:21 pm
The latest news from Spain and Tenerife's Euribor and mortgage situation

The latest news from Spain and Tenerife's Euribor and mortgage situation

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 1 % in November to a new record low of 1.231%. – Euribor has now fallen for 14 consecutive months, and is 72% lower than it was a year ago. – As a consequence of the latest reduction in Euribor, repayments on a typical annually-resetting mortgage (140,000 Euros, 25 years, Euribor +0.5%) will fall by around 240 Euros a month, or 2,800 Euros a year.  Economic analysts expect Euribor to stay around current low levels in the months to come. Both Jean Claude Trichet, President of the ECB and Miguel Ángel Fernández Ordóñez, Governor of the Bank of Spain, have said that current base rates are at the “appropriate level”.

The volume of new residential mortgages signed in September was 62,411, down 4.2% compared to the same month last year. In value terms new residential mortgages were down 16% to 7.3 billion Euros.  The good news is the decline in new mortgage lending has been bottoming out in the last few months. It fell 31% in June, 19% in July, 7% in August, and 4.% in September. If the trend continues new mortgage lending will soon be growing again year-on-year in volume terms. That will give some support to the housing market and if you have a good relationship with your estate agent, they will be able to point you in the right direction, particularly in Tenerife for the best deals available.

By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do, Uncategorized | Tagged , , , , , , , , , , | Comments (0)

Boost for Spanish mortgages?

September 6, 2009 – 4:19 pm

Euribor is now 75% lower than it was this time last year, when it stood at 5.323%, leading to significant savings for Spain property owners with a mortgage.

Mortgage boost for Spain and Tenerife?

Mortgage boost for Spain and Tenerife?

Euribor, the interest rate normally used to calculate mortgage payments in Spain, fell to a record low of 1.334% in August, down from 1.41% in July.

The cost of financing the purchase of a property in Spain has been falling month-on-month for almost a year, with the Euribor having depreciated for eleven consecutive months, setting a new record low in each of the last six months. Euribor has gone from record high to record low in the space of a year.

Thanks to the latest drop in Euribor, the average owner of a property in Spain and Tenerife with a mortgage can expect to save around €316 (£276) per month, or more than €3,800 (£3,230) per year, on mortgages that reset around now.

However, there is evidence to suggest that most banks are not passing on falling rates to customers, opting to raise margins instead.

Mortgage experts do not expect Euribor to drop much further from here, certainly not below 1%.

By Angela | Posted in Economy, General, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , , | Comments (0)

Latest mortgage news

August 16, 2009 – 5:39 pm
Loans increas in Tenerife and Spain as property prices are more affordable

Mortgage costs in Tenerife and Spain reduce making property purchases more affordable

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell to an all time record low of 1.41% in July, down from the previous record low of 1.61% in May. Euribor is now 73.8% lower than it was this time last year, when it hit a high of 5.393%, leading to significant savings for mortgage borrowers on annually resetting mortgages.

Thanks to the latest drop in Euribor, the average borrower can expect to save around 300 Euros per month, or more than 3,500 Euros per year, on mortgages that reset now.
Euribor has been following down base rates set by the European Central Bank. These started falling in October last year, when they were lowered from 4.25% to 3.75%, and now stand at just 1%. The relentless recent fall in Euribor suggests that the market might be expecting further cuts in base rates.Mortgages fuel the property market, so activity in the mortgage market is an important indicator for the property market.

The latest figures from the National Institute of Statistics (INE) reveal that mortgage activity is still significantly down on last year, but may have turned a corner in May as key figures started to improve on a monthly basis.

The number of new residential mortgages signed in May fell by 23% to 57,614 compared to the same month last year, but rose by 15% on a monthly basis.

The average mortgage value in May fell 14% to 121,120 Euros year on year, but rose 5% month on month.

Overall new mortgage lending was 7 billion Euros, 33% less than a year before, but 20% higher than April.

The average interest rate agreed for new mortgages in May was 4.6%, 11% lower in percentage terms than a year ago, and 2.2% lower than the preceding month.

96% were variable rate mortgages, the remainder fixed rate

By Angela | Posted in Economy, General, Miscellaneous Articles, Property, Tenerife, Uncategorized | Tagged , , , , , , , | Comments (0)