Euribor rate falls

April 3, 2012 – 11:29 am

Spain's Euribor rate falls, causing mortgage costs to fall in Tenerife

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell to 1.45pc in March, leaving it 25pc lower than the same time last year. As a result, repayments on a typical 25-year, €120,000-mortgage resetting now will go down by around €25/month or €300/year.

Mortgage rates are plunging because of the new policy by the European Central Bank (ECB) to provide banks with unlimited funding for 3 years. None of this means cheap credit for mortgage borrowers.  When banks can only get short-term (3-year) financing, they avoid lending to house-buyers for 25 years.

Partly as a consequence, new mortgage lending in Spain has collapsed, down in January an annualised 41pc by volume, and 47pc by value, with the average mortgage value down 10pc.  It’s clear Spain is back in a credit crunch.

So mortgage rates have plunged, but so has new lending. The result is less money available to buy housing, which means downward pressure on prices.

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

Spanish house prices return to 2004 levels

March 15, 2012 – 11:32 am

Tenerife and Spanish house prices hit 2004 levels

The General IMIE Index, an indicator created by Tinsa to analyse the evolution of house prices in the Spanish market, increased its year-on-year decline in February, falling by 9.5% to 1664 points, returning to the levels of 2004.

The cumulative decline from the top of the market in December 2007 increased to exactly 27.1%. The deterioration of the macroeconomic environment with significant job losses, together with an increase in the spread on mortgage rates, are offsetting the positive effect of reinstated tax breaks on house purchases.

With regards to the performance of the different market segments, “Capitals and Major Cities” once again recorded the severest decline in February of 11.5%, followed by “Metropolitan Areas” with a fall of 10.3%, compared with the same month the year before. In both cases the decline was greater than the market average.

With a similar level to the General Index, the municipalities of the “Mediterranean Coast” segment declined by 9.5% year-on-year.

Source: Kyero.com

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

Euribor rate falls again.

October 17, 2011 – 12:31 pm

Euribor rate falls again affecting property sales in Tenerife

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, fell for the second month in a row to 2.067pc in September, a percentage fall of -1.4pc on the previous month.

The rise of Euribor seems to have topped out, at least for the time being. With markets still fretting about a European debt crisis, expectations of rising interest rates have fallen, taking the heat off Euribor rates. The European Central Bank has said it has no plans to raise (or cut) the base-rate any further. It now stands at 1.5pc.

The monthly fall will not be much comfort for those with an annually resetting mortgage. Euribor is now 45.6pc higher than it was 12 months ago, meaning repayments on the average mortgage will rise by 480 Euros/year.  It was way too low between 2002 and 2006, sparking off an insane boom in Spanish real estate. It rose in 2007-2008 as other European economies and inflation started to grow too fast , but was slashed in 2009 to head of a depression. It made a feeble attempt to rise again this year, but that has run out of steam with the economy. It is now back around 2pc – way below what it should be in normal times.

But right now the problem is not so much the Euribor rate, which is historically low,  it is that banks don’t seem to want to lend at any rate, starving the housing market of credit without which it cannot recover.

New mortgage lending fell 47pc in July (to 29,523) compared to the same month last year, the lowest level recorded since this data series started in 2003.

The average residential mortgage value was €110,604, 9pc down on last year. All of which means less money around to fuel demand for Spanish property, putting further downward pressure on prices.

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

Shop around for your foreign currency when buying property abroad

August 11, 2011 – 5:29 pm

Take care when exchanging currency to purchase property in Tenerife and overseas

Independent analysis on the European property market found that average foreign property buyer spending £125,000 on their overseas home would receive €131,547 from a high street bank. However using a specialist foreign currency provider could result in an improved rate of €139,033 – a massive €7,486 difference equivalent to around £6,600, according to GSA.

The highest return on a £125,000 transfer was €139,650 offered by Currencies.co.uk, while the lowest was €131,062.50 offered by HSBC.

Just 10% of foreign currency transactions are made using a foreign currency provider, who can offer around 5.6% more than the High Street as they use commercial exchange rates to determine the value.

Savills International Research on second homes found that around 130,000 overseas properties were purchased by Britons between 2005 and 2009, potentially wasting millions as a result of poor exchange rates.

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

Standard and Poor’s property ratings

May 25, 2011 – 9:58 am

 

Standard and Poor's ratings of Tenerife and Spanish property.

Standard & Poor’s, a ratings agency state that prices  are to continue falling over the next 12-18 months but not dramatically. Transactions  are expected to continue their modest recuperation. They say it will take “several more years to completely absorb the excess supply.”

BBVA, a Spanish bank: Price falls of 10pc on average in 2011, on top of falls of up to 50pc already accumulated on the coast. BBVA say holiday-homes on the coast fell 20pc in value last year.

The Valencian Institute of Economic Research (IVIE): Price falls of 12pc on average in 2011, on top of a fall of 20pc accumulated since 2008. Spain’s chunky glut of homes and rising interest rates will keep prices going down for the time being, argue this Valencian outfit.

Illustrating IVIE’s point about prices falling more in real terms, the ups and downs of prices since 1985, in both nominal and real (inflation adjusted) terms. After inflation, prices are back to where they were in 2003 / 2004, but they still have further to fall.

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

Sterling slide against the euro and dollar is halted

February 17, 2011 – 12:18 pm

The sterling exchange rate against the euro affects those making property purchases inTenerife at present.

Sterling struggled for most of the week ahead of the Bank of England’s interest rate decision on Thursday. Recent speculation regarding potential interest rate hikes by the UK central bank saw traders buying into the pound but with low growth levels and inflation expectations indicating an increase in price pressures over the coming months the likelihood of a rate hike has diminished and concerns that premature monetary tightening could risk destabilising the UK recovery.

Economic data from the United Kingdom gave little support to the Pound which was batted around by risk aversion and movements in EUR/USD exchanges. The British Retail Consortium released its retail sales index which indicated sales had bounced back in January after a decline due to poor weather in December.

However, it is thought a rush to beat the VAT increase had contributed to the late push in higher retail spending. RICS house price data showed the pace of price declines eased for a third consecutive month. The data underlined the difficulty faced by the Bank of England in its decision over whether to raise interest rates, similarly a mixed performance in industrial and manufacturing output added to the argument that caution was required to support growth as well as tackling inflation.

The Bank of England rate decision saw the Pound react positively to the announcement and halted the currency’s slide versus the dollar and the euro. The UK central bank kept interest rate on hold at 0.50% and made no changes to its £200bln asset purchase program, as expected.

Expectations are still that the BoE may be forced to raise rates to combat inflation. A view supported by the release of higher than expected PPI inflation figures although late week geo-political tensions rising in Egypt prevented any gains as risk aversion dominated trade.

Clearly the sliding pound against the euro makes a difference for those who are trying  to buy property in Tenerife at present but also for  those who are selling and wish to change the euros back into pounds. The use of a good money exchange company such as Moneycorp will ensure that you get the best exchange rate for whichever currency that you have. The rates from these companies tend to be better than the high street banks. It really does pay to shop around.

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

Rough week for euro market after interest rate and bond concerns

January 18, 2011 – 11:55 am

A rough week for Euro market rates

A  degree of uncertainty over the results of the highly anticipated Portuguese bond auction saw the Euro trade cautiously in the early part of this week, Portugal has remained under the spotlight  recently as fear of contagion gripped markets over possible escalation in Europe’s ongoing sovereign debt problems.

The euro saw some marginal appreciation across most majors after speculation hit the market that the Swiss government may take action to temper the strength of the Swiss Franc versus the Euro and maintained the higher end of ranges with further speculation that the European Central Bank would be aggressively participating in the coming sovereign auctions. Portugal’s bond auction produced a successful result with the full €1.25bln being sold and the 10-yr yield average coming in lower than had been anticipated and thus meant a sustainable cost level for Portugal. Bond auctions from Spain and Italy followed that of Portugal just ahead of the European Central Bank rate decision. Both countries had successful auctions and like their Portuguese counterparts Spain’s bond yields also average lower and pushed the single currency higher.

The ECB kept interest rates unchanged at 1.0%, as expected, but surprised markets by changing the tone of its monetary policy stance to being a lot more hawkish. In his press conference ECB President Trichet warned of inflationary risk within the euro zone and stated the central bank was prepared to raise interest rates to ensure price stability. The governing Council saw evidence of short-term upward pressure to overall inflation and while medium-term pressure remained anchored risk to the upside had increased.

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

Euribor rate falls

January 7, 2011 – 10:04 am

Spain's Euribor rate falls

Euribor (12 months), the interest rate mainly used to calculate mortgage repayments in Spain, fell to 1.507pc in December, from 1.541pc in November (-2.2pc). On an annualised basis, Euribor  changed by 21pc compared to the end of last year. That means higher monthly repayments for borrowers with mortgages resetting now.

As a result of the latest increase, repayments for a typical mortgage (150,000 Euros, 25 years, Euribor +0.5) will go up by 20 Euros /month, or 240 Euros / year.

The big news of the month was October’s collapse in new mortgage lending, which fell by an annualised 24pc (to 39,542), and by 25pc compared to September, according to figures from the INE

This is the sixth month in a row that new mortgage lending has fallen, a clear sign of trouble for the market. New mortgage lending has been falling since July, and the latest fall comes on top of a slump of 16pc in September.

The average residential loan value in October was 111,368 Euros, down 2.7pc over 12 months and down a startling 6.8pc compared to September. Significantly fewer, smaller loans means a lot less money chasing property, putting further pressure on prices.

Total new residential mortgage lending in October was 4.403 billion Euros, down 26.4pc in a year. The average new mortgage interest rate was 3.74pc, down 10.7% in a year but up 0.3% in a month.

By Angela | Posted in Economy, General, Health, Holiday, Inspirational, Miscellaneous Articles, Property, Tenerife, Things to Do | Tagged , , , , , , , , , | Comments (1)

How to avoid foreign exchange pitfalls.

August 7, 2010 – 10:08 am
Avoid fees when exchanging money in Tenerife, Spain or the Canary Islands

Avoid fees when exchanging money in Tenerife, Spain or the Canary Islands

Families going abroad this summer are being warned that they could lose hundreds of pounds exchanging their money at the airport bureau de change.

Currency prices can be up to 9% more expensive at Gatwick, Heathrow and Stansted compared with other foreign exchange outlets, a survey has revealed. This means a family changing £1000 for a European holiday are £104 worse off buying euros at the last minute, rather than ordering in advance from a specialist firm which can find the best available rate. The company surveyed exchange rates for euros and dollars at bureaux de change at Gatwick, Heathrow and Stansted airports and also checked high street deals on offer at the Post Office and Marks & Spencer.

Over 14 million Britons went on holiday abroad between July and September 2009. If half of these travellers exchanged just £500 spending money at an airport bureau de change before going on holiday to Europe, they could be saying goodbye to £493 million pounds.

Specialist providers apart, the best exchange rate for buying euros was at The Post Office Phil McHugh, senior foreign exchange dealer said: “Our survey highlights the big difference in currency exchange rates offered between the high street, airport bureaux de change and specialist providers.

“People often plan their foreign holidays well in advance, shop around for the best deals and book early to save money, yet they seem to leave their common sense at the airport drop off when it comes to changing holiday cash.

“Travellers should take a few minutes to check exchange rates online or over the phone in advance of their holiday and arrange with a foreign exchange specialist for their money to be delivered to their home or work, saving themselves time, hassle and cash in the process.”

Tips for those coming to Tenerife regarding currency exchange include,  think ahead about your currency needs and avoid changing your money at bureaux de change, particularly at airports. Shop around for the best rate – don’t just automatically go to your bank or post office. Specialist providers can offer much better deals. Beware of hidden charges and high commission rates. A good headline rate does not necessarly mean the best value for money.  Avoid poor exchange rates by taking travellers cheques or currency cards with you instead of using credit or debit cards for large purchases. Travellers cheques or currency cards can also help avoid the hefty fees banks and credit card companies charge for using ATMs overseas.

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