Euribor rate falls for fourth month in a row

January 4, 2012 – 11:40 am

Euribor down again which means mortgage repayments up in Spain and Tenerife

Euribor, (12 months), the interest rate typically used to calculate mortgage repayments in Spain, fell for the fourth month in a row to end the year at 2.01, a percentage fall of 1.7pc on the previous month. Compared to the 12 months ago, however, Euribor rose by 33.4pc, meaning higher mortgage repayments for all those on annually resetting mortgages.

The European Central Bank (ECB) cut base rates from 1.25 to 1.00 during December, the second cut in 2 months since the Italian Mario Draghi took over as the new Governor. Markets were expecting the cut, and judging by Euribor’s recent trend do not expect rates to increase any time soon. As you can see from the following chart, Eurozone base rates are still significantly higher then the US, the UK, and Japan.

New mortgage lending continued to shrink in October, with new mortgage approvals down 43pc to 23,193 (and down 46.5pc by value), according to figures from the INE. It’s clear the credit crunch is well and truly back in Spain.

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

Euribor Rate

December 5, 2011 – 10:58 am

Euribor down again which means mortgage repayments up in Spain and Tenerife

Euribor(12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell for the third month in a row to 2.044pc in November, a percentage fall of -3.1pc on the previous month.

After rising abruptly in the first quarter of the year, Euribor has been stable or declining since May in expectation of a cut in the base rate.

Mario Draghi, the new Governor of the European Central Bank (ECB), announced a cut in base rates of a quarter of a point to 1.25% just a few days after taking over from Trichet at the beginning of November. In the face of alarming economic headwinds, markets expect the ECB to cut the base rate even further, hence the fall in Euribor.

When the Euribor goes  down, mortgage payments  go up.The fall in Euribor will not be much immediate comfort for those with an annually resetting mortgage. Euribor is now 33pc higher than it was 12 months ago, meaning repayments on the average mortgage will rise by 400 Euros/year.

The Credit Crunch is back in Spain with a vengeance. New mortgage lending fell 42pc in September year-on-year (to 30,808), and the average value fell 6pc to €111,934, according to figures from the Statistics Institute (INE). Lower mortgage lending = less money chasing homes , downward pressure on prices and more bad news for vendors.

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

INE say sales down in September

November 21, 2011 – 10:25 am

House sales down say INE

There were just 22,065 home sales in September (excluding social housing), 30.5pc down on the same month last year and 62pc down on September 2007, according to the latest figures from the National Institute of Statistics (INE).

Monthly sales this year since March have been the lowest since the crisis began. The positive start looks like a dead-cat-bounce. On a year-to-date basis sales in 2011 are 20pc below last year, and 56pc below 2007. The big question is can it get any worse in 2012?

Sales have been bad this year, falling by as much as 40pc in August, with an average annualised fall of 29pc each month since March. the market is shrinking fast, a clear sign that prices are still too high.

All this at a time when Spain is saddled with a monumental glut of homes for sale, not to mention unemployment of 22pc and rising. More than 40pc of young Spanish adults are out of work. Demographics are also starting to blow against the Spanish economy.

Unless the newly elected  Government takes radical steps to liberalise the economy, boost employment, and force banks to stop keeping property prices artificially high, it’s hard to see a way out of this mire.

What about holiday homes? The situation is a bit different because demand is internationally diversified, at least in some areas such as Tenerife. Some quality segments of the holiday home market will recover before the overall housing market. That said, this year and next year will be very tough.

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

Euribor rate rises

November 9, 2011 – 10:52 am

Euribor rates rises again in Spain and Tenerife

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, rose to 2.11pc in October , a percentage increase of 2.1pc on the previous month.

Over 12 months Euribor was up 41.1pc, which means higher monthly mortgage payments for those with annually resetting Spanish mortgages. Average mortgage repayments will rise by around €45/month, €540/year

New mortgage lending is the lifeblood of the housing market without which most Spaniards cannot afford to buy homes. So it is particularly worrying that new lending fell 49pc in August compared to a year before, the lowest level on record for this data series published by the Statistics Institute (INE). New mortgage lending has now fallen for 16 consecutive months, suggesting that the credit crunch is still alive and well in Spain.

The average new mortgage value in August was €106,922, 12.6pc lower than a year before.

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

Spanish house prices fall again,though prime areas fair better

September 12, 2011 – 9:07 am

Property prices in Tenerife,Balearics and Costa Brava fair better than the rest of Spain

Average Spanish house prices fell 4.1pc over 12 months to the end of Q1, according to the latest house price index published by Spain’s National Institute of Statistics (INE).

That represents a turn for the worse after prices clawed their way back towards stability in the second half of last year.

New build prices fell 1.9pc, whilst resales were down 6.3pc, the worst result since Q3 2009.

This ties in with other data such as falling transactions to paint a picture of a housing market still far from out of the woods.

Not all market segments are suffering equally. Prime segments in upmarket destinations like the Costa Brava,Tenerife, and the Balearics are doing better.

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

Housing market shrinks again

August 21, 2011 – 5:28 pm

Housing market shrinks again

Home sales in June were the lowest since the property crash began, show the latest figures from the Statistics Institute (INE).
There were 24,699 home sales in June (excluding social housing), down 26pc on the same time last year,  even June 2009, when the crash was thought to be at its nadir.  It is clear that, after a deceptively promising start, 2011  is turning out to be the worst year yet.
Compared to June 2007, sales were down 60pc – a teeth-jarring fall by any measure.
Year-to-date, transactions are down 11pc compared to last year, 3pc compared to 2009, and 55pc compared to 2007.
Assuming that prices have fallen by an average of 30pc since 2007, then in value terms (Euros) the market has shrunk by 70pc since then. That means 70pc less money around for everyone who lived off the housing market, town halls in particular.
All this helps explain why many town halls are now in the jaws of a financial crisis: They ramped up their spending and overheads during the boom, assuming it would last for ever, but now the money has dried up and they can’t afford to pay their bills. A 70pc fall in revenues from real estate helps explain why.
Why are transactions still falling? Partly because the credit crunch is still in full swing – in Spain at least – and partly because the abolition of mortgage tax relief at the end of last year brought forward sales that might otherwise have taken place in the first half of this year. So the figures might make the market look worse than it actually is. To find out we will have to wait and see if there is a recovery in the second half of the year, let’s hope it improves in Tenerife too.
By Angela | Posted in Economy, General, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , , , | Comments (0)

Euribor rate falls a fraction in June

July 5, 2011 – 10:00 am

Euribor rate falls . Properties in Tenerife and Spain will cost more if mortgage rates are set now

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell a fraction to 2.144pc in June, a percentage change of just -0.1pc on the previous month.

On an annualised basis, Euribor is now 67pc higher than it was a year ago, meaning higher monthly repayments for borrowers with mortgages resetting now.

Repayments for a typical mortgage (150,000 Euros, 25 years) will go up by around 61 Euros /month, or 741 Euros / year. That will punish many a stretched household budget in Spain.

In other mortgage news, new mortgage registrations dived an astonishing 38pc YOY in April to 31,358,, according to the National Institute of Statistics (INE). The average mortgage value fell by 3.8pc. That came on top of a 20pc fall in March. Lending is at all-time lows, which is bad news for the housing market.

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

House price index for Spain

May 9, 2011 – 8:35 am

The Official House Price Index published by the National Institute of Statistics (INE) would have us believe that Spanish house prices fell a mere 1.9pc in 2010

New build (vivienda nueva) prices fell -2.1pc, and resales (segunda mano) fell -1.6pc

The suggestion that Spanish property prices only fell 1.9pc last year, against a background of 20pc unemployment, tightening mortgage credit, and a monumental property glut is difficult to fathom.

These figures tend to distort price signals from the market and put off potential buyers. We might be better off if the INE did not publish house price figures. Not all official figures are so unreliable. According to figures from the Department of Housing, prices fell -3.5pc last year, and 6.5pc in real terms (after adjusting for inflation). That sounds closer to the truth, even if maybe still a touch  too optimistic.

Meanwhile, whilst mainland  Spain struggles in the property sector, the  islands, particularly the Balearics continue to improve, Tenerife being the best performer from the Canary Islands at the moment, mainly in the area of prime coastal property.

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

Good news for Spanish real estate as sales increase.

February 14, 2011 – 9:35 am

Good news for Tenerife and Spain's property market

Spanish real estate has had its first official good news since the collapse of the market, with home sales increasing last year for the first time since 2007. The latest figures from the country’s National Statistics Institute (INE) show property sales in Spain rose 6.8% in 2010, which, whilst still significantly down on boom-time levels, marks a huge turnaround from the vast decline of the previous two years. 

Property sales totalled 441,386 in Spain last year, compared to 775,300 at the height of the boom in 2007. When the financial crisis, combined with a glut in supply caused by overdevelopment of many tourist areas, caused the property bubble in the country to burst, sales began to decrease rapidly. The INE reported a 28.8% decline in 2008, followed by an equally dramatic 25.1% contraction in 2009.

While some speculators say prices have yet to hit their lowest, the modest yet significant 6.8% sales growth for 2010 may indicate that the worst of the crisis is over. With the government having embarked on a full-scale public relations campaign to lure disillusioned British buyers back to the market, and Prime Minister Jose Luis Zapatero’s efforts to overhaul the banking and labour market sectors, 2011 is likely to see a further slow increase as the country’s economic crisis begins to recede.

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

Rents on the rise for landlords

September 3, 2010 – 4:11 pm
Rental income on the increase for landlords in Tenerife and the Canary Isles

Rental income on the increase for landlords in Tenerife and the Canary Isles

Rents are rising and prices are falling, so yields are improving for landlords. Average rental prices rose by 1% in July compared to last year, show the latest figures from the National Institute of Statistics (INE). This is surprising given the glut of property for sale and rent on the market.

Over 6 months annualised rental prices have gone up by between 0.9% and 1.2% per month, whilst house prices have gone down between 4% and 5%, meaning that rental yields are improving. Some good news at least for beleaguered property investors.

But consumer price inflation has risen by 1.9% in the same period, so although yields are rising, rental income in real terms is actually falling.

Rents went up the most in the Balearics  and Canary Isles (+1.5%), and down the most in Navarre (- 0.5%).

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