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.
Euribor (12 months) ended April on a monthly average of 0.604, up 4.7 per cent on March and 14.4 per cent higher than the same time last year.
That’s the largest annualised increase in Euribor since January 2012, and only the second increase in 27 months. So it looks like the European Central Bank’s interventions to drive down interest rates have largely played out, with interbank base rates at a historical low of just 0.25 per cent.
The ECB has made it clear that interbank base rates will remain low for the foreseeable future, so nobody expects a sudden jump in Euribor. However, some analysts forecast a mild increase in Euribor over the coming months, to around 0.650 by August.
Last month’s increase in Euribor won’t be welcome new to Spain’s stretched borrowers, but it won’t have much of an impact on household budgets, amounting to around two euros a month more on a typical €150,000 mortgage.
Euribor last peaked in July 2008 at 5.393 per cent, so we are still a long way from a situation of normal base rates, let alone high rates. Artificially low base rates have a habit of stoking up housing bubbles, as some argue is happening once again in the UK.
Spanish Mortgage Lending Implosion Continues
It doesn’t seem to matter what happens to the price of money in Spain, mortgage lending carries on imploding. New mortgage lending on residential homes in February fell an annualised 33 per cent to 16,420 in volume terms, and 1.1 per cent by average mortgage value, to €102,443, all according to the latest figures from the National Institute of Statistics.
Strangely, February’s new mortgage lending surged in Madrid and the Basque Country whilst falling everywhere else.
The overall drop in new mortgage lending has a lot to do with the artificial collapse in homes sales at the start of this year, brought about by fiscal distortions, as explained in this article: Fiscal Distortions Behind February Plunge in Home Sales. There will probably be an artificial surge in new mortgage lending in the coming months, as fiscal distortions wear off.
