There has been an increase in the number of mortgages issued for residential home purchases in Spain in February as compared to the same period in the previous year. In February 2016 15.9% more mortgages for residential homes were issued by Spanish banks than in February 2015. However banks are reporting that they see a decrease in the number of mortgage applications in general and that it is only the residential sector which seems to be prospering. The Spanish banks blame the upcoming Spanish general election for the buyer’s hesitation. The banks claim that the public are unsure of whether a new government will change property or banking laws and so potential property buyers are hanging back and waiting to see what the outcome will be in June after the general election.
The Spanish banks predictions are based on figures issued recently about February 2016 statistics. However it must be remembered that some of the mortgages registered in February were probably set in motion in December 2015 or January 2016. The 24,887 residential mortgages registered in February 2016 means a 15.9% increase from the same period 12 months earlier. The total loan capital for the same period was €2.7 billion which is a 14.4% increase on the same period 12 months earlier however the average mortgage loan capital in each deal was €108,466 which is a drop of 1.4% on the same period in 2015. The only region which did not show an increase in mortgages was the Basque Country. The region where the highest increase was registered was Extremmadura with a 56% increase in mortgage activity as compared to the same period 12 months earlier.
It remains to be seen whether the general election will affect the property market or whether the low market prices and the decrease in unemployment with make up for any political upheaval.
The price of houses in Barcelona and Spain in general are slowly rising and the market seems to be recovering from the long slump it experienced since the property bubble burst in 2007. One of the reasons for the rising property prices is that Spanish mortgages are now cheaper and easier to obtain. The number of new residential mortgages completed in Spain has been steadily rising. Where as in April 2015 12,716 new residential mortgages were completed in Spain, in July 2015 the figure was 17,450; this marks a 27% increase when compared to July 2014. This took the number of property sales involving mortgage financing in Spain to 46%; the highest percentage since the property boom years prior to 2007.
Over the course of the last year (from July 2014 to July 2015) there have been a few unexpected peaks in the number of mortgages. For example in December 2014 there were 17,476 new residential mortgages completed, the highest in a 12 month period. The lowest points came in August 2014 (6,804 new residential mortgages completed) and in January 2015 (8,851 new residential mortgages completed).
The easier access to financing in Spain and the less stringent terms have raised the demand for property creating a more active market and rising sales figures. The banks are in competition with one another to draw in the new home buyers and so they offer special deals, easy terms and lower their profit margins just to get new mortgage clients. Spanish mortgages are some of the most attractive in Europe. Spanish property prices are still some of the lowest in Europe despite the indications of a market recovery. Buyers should take advantage of the low property prices and the easier and cheaper mortgage plans before the Spain property market’s recovery really takes off leading to a dramatic rise in property prices.
