The latest Euribor and Spanish mortgage news and charts for August 2013
Euribor (12 month) rose another fraction last month, from 0.525pc in July to 0.542pc in August, up 3.2pc in a month, but down 38.2pc in 12 months.
This small monthly increase makes little difference – Euribor is still unusually low thanks to the intervention of the ECB, and close to its all-time low of 0.484pc in May.
But as you can see from the chart below showing the annualised change, Euribor has clearly bottomed out and is back on the rise. The interest rates cycle has turned.
As a result of the 12-month decline, a typical 20-year / €120,000 mortgage will see monthly payments fall by around €25, or €300 per year.
Spanish Lending Drought
Regardless of whether Euribor goes up or down, the Spanish mortgage drought continues. There were just 14,053 new mortgage approvals in June, down 42pc in a year!!! (24pc in a month), to the lowest level since the National Institute of Statistics started publishing this data series in 2003.
Only 31pc of home purchases in June included a mortgage, according to the notaries’ association.
The average new mortgage value in June was €97,495, below the €100,000 level for the first time, and 9pc down in 12 months. Overall new mortgage lending in value terms fell 47pc in a year.
So mortgage lending has collapsed to the lowest level since the crisis began, and it’s clear that the credit crunch in Spain is still in full swing.
What happens when new mortgage lending contracts so savagely? House-hunters have lower budgets (cash only) so vendors have to drop their prices to find a buyer. Add to that the recent increases in taxes on house purchases, rising unemployment, and the imminent liquidation of large portfolios of properties, and Spanish house prices can only go one way: South.
That conclusion, however, does not necessarily apply to all market segments on the Spanish coast, where foreigners with cash are now the main buyers. The lending drought affects the domestic housing market, not so much the international market on the coast.