The current strong US dollar comes with a big advantage for American buyers taking out a mortgage in Spain. If, in addition, you add the possibility of 70% borrowing and a choice of lenders, now is a prime time for dollar buyers to purchase with a loan.
Exchange rate fluctuations offer considerable advantages to buyers whose income currency is strong at the time of purchase. The current euro-dollar scenario is one such example, with dollar buyers enjoying parity with the euro and more purchasing power as a result.
Spanish property is one of the most attractive options to American buyers who may also benefit from favourable loan conditions. They include, for instance, up to 70% loan-to-value and a wide choice of lenders.
“We believe the current time presents one of the best opportunities in recent months for American buyers in Spain,” says Katherine Walkerdine, a founding partner at Mortgage Direct. “The exchange rate is heavily in their favour, and this, combined with the right loan, can mean that there has been no better time to buy a property in Spain.”
The fall of the euro to dollar parity
The double whammy of rising inflation and the war in Ukraine has hit the euro hard in terms of currency exchange. In contrast, the US dollar has consolidated its position as one of the world’s most sought-after currencies and as a result, increased its value against almost all others.
In the year to October, the euro lost 13.6% of its dollar value and currently trades at slightly over US$1. The exchange rate fell below parity in early September, and sunk to its lowest level this year on 27 September when it stood at US$0.95892.
The current scenario means that dollar buyers have the opportunity to obtain over 13% more for the money when they buy in Spain.
Forecast for the euro-dollar exchange rate
Analysts believe this near parity will continue in at least the short term as the war in Ukraine continues and the greenback remains a safe haven for the world’s money. They forecast a slight rise in the euro (up to US$1.02) during 2023 and 2024, with no significant shifts in the short to medium term.
Types of mortgages available
At Mortgage Direct, we have a range of mortgage types available to American buyers. For example, fixed and variable rate loans for up to 70% loan-to-value.
Equally important is the choice of lenders. We currently have a wide portfolio that accepts Spanish mortgage applications from dollar-income earners, a choice that gives the buyers plenty of options in loan terms.
And we’re able to offer this choice despite the risks that lenders have traditionally perceived in foreign currency incomes.
Proven track record
As always, the secret to a successful loan application lies in your mortgage broker’s expertise and market experience. At Mortgage Direct, we have an extensive track record of obtaining loans for our American clients. They currently constitute 10.5% of our mortgage business and we fully expect this percentage to continue to rise in tandem with the beneficial exchange rate.
For Spain, Mortgages taken out in currencies other than the currency in which you earn are considered Foreign Currency Mortgages. Changes in the exchange rate may therefore increase the equivalent value of your debt. Under the Mortgage Law 5/2019 banks in Spain have introduced mechanisms to protect consumers from exchange-rate risk. For more information, please speak to your broker.
Mortgage Direct, S.L. is a company registered in the Registro de Intermediarios de Crédito Inmobiliario del BdE with the nº D108.