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 to 1.45pc in March, leaving it 25pc lower than the same time last year. That’s a big fall.
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.
The following chart shows Euribor over a decade.
Credit Crunch II
None of this means cheap credit for mortgage borrowers. Quite the opposite: 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, as illustrated in the charts below. 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 (in the average).
Mark Bravin says:
Mark: I just signed up for your service. I am an American living in the States. I am forming a new Spanish corporation and will use it to purchase an apartment in a very nice part of Barcelona, which I will rent out initially. I will need to decide soon whether to assume the seller’s mortgage or get a new one. I am very credit worthy and could accept a mortgage of 60-70% of appraised value for 10-20 years.
1. What do you charge for mortgage broker services?
2. Based on the above information, and your recent experience, can you give me an idea of current mortage rates for either a 10-20 year fixed rate, or an APR mortage?
3. Apart from your fees, approximately how much should I expect to pay for bank fees, notary fees, taxes, appraisal, and anything else associated with getting a new mortgage?
4. How much time should I allow for the process of getting the mortgage?
5. Is there any other information you would need to answer the questions above?
Mark