A summary of Spanish mortgage and interest rates news

• Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.8% in March compared to the previous month, finishing at 1.215%.
• Once again, Euribor is at the lowest level on record, down 36% in 12 months, and 77% down from its all time high of 5.393% in July 2008.
• Thanks to the latest reduction in Euribor, repayments on a typical annually resetting mortgage (120,000 Euros, 25 years, Euribor +0.8%) will fall by around 41 Euros a month, or 500 Euros a year.
• When Euribor rose a fraction in December I suggested that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January, February, and March, that still probably holds true. Flipping around is often consistent with a period of change.
• Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. Next month borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower.
• Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.

New mortgage lending activity

• New mortgage approvals rose 2.3% to 53,747 in January compared to the same month last year, after an annualised fall of 1.3% in December, showing there is not yet a clear trend towards improvement.
• On a monthly basis, new mortgage lending was up 12.3% in January.
• The average mortgage value was 112,839 in January, 7.6% lower than January 2009.
• Overall new lending was down 5.5% to 6.064 billion Euros.
• What does it all mean? That less credit is available whilst the glut of homes on the market keeps growing. Expect prices to continue falling, for some types of property at least.