Euribor fell to yet another record low of 0.212% in March, a decline of 17 per cent in a month, and 63 per cent in a year, reducing monthly mortgage payments for borrowers in Spain, whilst new mortgage lending rose 20 per cent in January.
The annualised decline in Euribor (12 months) was the biggest since February 2013, and can be attributed to the blast of “quantitative easing” unleashed by the European Central Bank (ECB). Despite talk of a rate rise in the US, nobody expects Eurozone rates to rise anytime soon.
Euribor is the base rate used to calculate mortgage repayments for most borrowers in Spain. Its latest fall will reduce costs on a typical mortgage of €200,000 with a term of 24 years left to run by €400 per year, or €36 per month.
New Mortgage Lending On The Rise
Lower mortgage costs are great for existing borrowers (at least those who avoided clauses that prevent them benefiting from lower base rates), but not much use to would-be home buyers who can’t get a mortgage. Fortunately January brought fresh evidence that banks are loosening their grip on credit, with new mortgage lending up 20 per cent compared to the same month the previous year, according to the National Institute of Statistics (INE in Spanish).
Last year new mortgage lending rose for the first time in seven years, and this year has started on a positive note, with 20,913 new mortgage signed in January.
The average home mortgage loan also increased in January, by 4.3 per cent, to reach €105,792. As a result, the total value of new home loans extended in January was €2.212 billion, a year-on-year increase of 25.2 per cent, and a rise of 32.1 per cent compared to the previous month.
The average interest rate on new home loans in January was 3.29 per cent, a substantial 20.6 per cent lower than the rate registered in January 2014.
Oustanding residential mortgage loans classified as bad were 5.85% (€32.6 billion) of the total in Q4 2014, according to the latest figures from the Bank of Spain.