Mortgage repayments rise most in 2 years

A summary of the Latest Euribor and Spanish mortgage news

Euribor (12 months), the interest rate normally used to calculate mortgage repayments in Spain, rose to 1.541% in November, the highest level since June 2009.

On an annualised basis, Euriborleapt by 25% compared to November last year. That spells higher monthly payments 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 21 Euros /month, or 252 Euros / year. That is the biggest monthly rise in 2 years.

Don’t be surprised if Euribor keeps rising over the coming months.

New Mortgage Lending

New residential mortgage lending fell by an alarming 15.9% in September compared to the same time last year. New mortgage lending has been falling since July, a clear sign of weak demand for homes.

This is the fifth month in a row that new mortgage lending has fallen, a clear sign of trouble for the market.

The average residential loan value in September was 119,527 Euros, up 2.1% on last year but down 1.5% on last month. So banks are lending more to fewer people, encouraging a 2-tier property market with prime and sub-prime segments going in different directions.

Total new residential mortgage lending in September was 6.329 billion Euros, down 14.1% in a year.

The average new mortgage interest rate in September was 3.75pc, down 10.7% in a year but up 1.6% in a month.

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About Mark Stücklin

Mark Stücklin is a Barcelona-based property market analyst and consultant, and author of the 'Spanish Property Doctor' column in the Sunday Times (2005 - 2008). He can be reached by email on ms@spanishpropertyinsight.com.