The latest Spanish mortgage news about interest rates and the mortgage market.
12-month Euribor, the base rate used for most mortgages in Spain, came in at -0.108 in February, a slight increase on the previous month, and 43.5% higher (less negative) than the same month last year. Euribor has risen for 11 consecutive months.
As a result, borrowers in Spain with annually resetting Spanish mortgages will see their mortgage payments rise by around €4 per month for a typical €120,000 loan with a 20 year term.
As the next charts show, Euribor is now on a gradual upward trend having declined for most of the last decade, but is still in negative territory and a long way from normal.
Spanish mortgage lending
As far as mortgage lending goes, the latest figures from the Association of Spanish Notaries shows that residential lending was up 6.2% in December 2018 to 23,051 new loans, as the Spanish mortgage market continues its gradual recovery.
As the chart below illustrates, mortgage lending has grown quite steadily since the start of 2014 (red line, left hand scale), but is still almost 70% below the level of July 2007 (orange line, right scale).
In 2007 the market was in a bubble, so not a benchmark to aim for. But the current level of lending still looks far too small, especially when you consider how low interest rates are. Many more people should be taking advantage of the low cost of borrowing and lower property prices to get on the property ladder in Spain. Why aren’t they? Because banks are still very cautious about mortgage lending after they got burnt the last time round, and because high transaction costs mean you have to have quite a lot of equity to even think about buying a house in Spain. That locks a lot of people out of the market, especially young families.