This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
A summary of the Latest Euribor and Spanish mortgage news
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.
The graph above makes clear that, 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.
Euribor down, mortgage payments 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.
New motgage lending collapses
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.
Alfie Orford says:
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