Archive for February, 2010

 

February 23rd, 2010

The International Monetary Fund said Thursday that Spain’s fiscal challenges are not as severe as those faced by Greece, reinforcing the message that Madrid has been delivering to the world’s financial markets.

In its first official comment on the matter, the IMF told investors that Spain should not be placed in the same boat as debt-laden Greece.

“Regarding Spain, we do see differences between their circumstances and those of other parts of the euro area,” IMF spokesman David Hawley said, dismissing the idea that Greece’s financial woes could spread beyond its borders.

Hawley said Spain has robust economic statistics and institutions with a solid track record and credibility, adding that the Iberian nation also had strong fiscal starting positions prior to the global recession.

That assessment echoed the message Spanish Economy Secretary Jose Manuel Campa has brought to Paris and London and plans to reiterate at closed-door meetings with investors in New York and Boston.

Campa said in an interview with Efe-DowJones that when investors see that the diagnosis of the situation has been correct and that the measures that the Spanish government has taken are adequate, “it will generate a lot of reassurance.”

Spain’s investment waters were calmer Thursday after the government sold a 5-billion-euro 15-year bond the day before in an auction that was oversubscribed, proving – experts said – the government’s ability to raise financing.

The country paid a risk premium of 85 basis points in the bond issue over the benchmark swap rate. By comparison, the risk premium demanded by holders of 10-year Greek bonds over Germany’s 10-year benchmark bonds rose Thursday to 328 basis points.

Hawley stressed Thursday that Greece’s budget deficit woes date back to before the global recession, while Spain had a surplus equal to 2 percent of GDP at the start of the financial downturn.

Story from Herald Tribune

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February 19th, 2010

The Spanish house price index figures for January 2010 have just been released. See the graph and the table below for an up to date overview of the real estate market trend in Spain.

Spanish House Price Index - January 2010

Spanish property prices fell by 5.5% over 12 months to the end of January, according to the property price index published monthly by Tinsa, one of Spain’s leading appraisal companies. However, prices inland fell by only 3.6%, which is a mayor improvement on the -6.8% last month, and confirms a general trend towards smaller price declines. At this rate prices of inland property will be stable or rising again sometime in the next few months.

The graph and table data represent the year-on-year evolution of Spanish property values. For example, if the value for August 2009 would be -3.9, then this means that average property prices in August 2009 are 3.9% lower than they were a year earlier, in August 2008.

The graph and table on this page contain up to date information for the past 13 months. For more information, please look at earlier monthly reports, or the historical overview since January 2001.

The graph and table data are based on actual property valuations, as established by one of Spain’s larget independent property valuation companies, Tinsa S.A. They are not based on asking prices or (under)declared selling prices, nor on the statistics as provided by the Spanish Ministry of Housing, and are therefore considered to be the most acurate and reliable source for this kind of information.

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February 10th, 2010

The European housing market hasn’t stopped attracting British buyers, with Spain as the top hot spot, according to The Independent.

Spain may be a surprise entry given that it is still struggling with high unemployment and a shrinking economy, but with average house prices falling by 8 per cent in the 12 months from September 2008, this may be the time to pick up property on the cheap.

And while Spain has been going through turbulent times, it is nevertheless still a firm favourite as a lifestyle holiday destination, despite all the bad press of late.

The British love affair with Spain shows few signs of abating. Spain came out as the top destination for international money transfers at the Post Office, as well as the cheapest place to live within the eurozone, according to its holiday costs barometer.

The full story: The Indepentent

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February 9th, 2010

The number of Brits buying euros for property purchases has increased in the last few days after sterling reached a rate of €1.15 for the first time since August 2008.

Foreign currency brokers have seen a 40% increase in clients buying euros, while new enquiries have shot up by 24%.

“A number of our clients in the market for euros are taking advantage of the improved exchange rate and buying their euros for overseas mortgage payments, property purchases etc now,” World First’s head of private clients, Elisabeth Dobson, told OPP.

“They are delighted to be getting a rate that is up to 12% better than the lows we have seen over the last 17 months. There are a number of clients who will have been holding off on property purchases and overseas investments due to sterling’s weakness against the euro. This rate move will certainly spur people on.”

A run of economic good news from the UK, including a fall in unemployment, rising inflation and an anticipation that the country is out of recession, has helped increase the pound’s strength. Meanwhile, economic problems in Spain and Greece have weakened consumer confidence in the euro.

Not all currency brokers have seen a substantial increase in business. “€1.15 is a bit of psychological barrier but most clients are still waiting for the magic €1.20 number,” Marc Morley-Freer, commercial director at Moneycorp, told OPP. “After the UK election we could see improvements that could push people to make lifestyle purchases – things are too uncertain before then.”

World First’s chief economist Jeremy Cook remains bullish following sterling’s 9% growth over the last year. “I don’t think this run in particular will last because it has happened so quickly, but the pound could be up to around €1.22 by the end of the year,” he told OPP.

Story from OPP

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February 8th, 2010

According to data released today by the National Statistics Institute (INE), the number of home mortgages issued during November 2009 was 52,043, representing a growth of 1.8 percent over the same month in 2008 and the first recorded rise since April 2007.

The volume of loan capital amounted to 6010.5 million, 10.1% less than the same month in 2008, which means that the average amount borrowed fell by 11.7% to 115,492 euros. Despite the rebound year in November, the cumulative comparison of January and November 2009 to the same period in 2008 showed an overall decrease of 23.2%.

Savings banks granted the most mortgages (52.2%), followed by banks (36.6%) and other financial institutions (10.9%). As for borrowed capital, savings banks granted 45.3% of the total, banks provided 43.0% and other financial institutions contributed 11.7%.

The average interest rate of savings banks was 4.25% and the average term was 23 years, while in banks, the average rate was 4.03% and the average term was 21 years. The variable interest mortgage remains the preferred option in 95.2% of mortgages, compared with only 4.8% opting for fixed rate. The Euribor was reported as the reference rate that was used in 88.7% of the mortgages.

The data also shows that in November, 40,156 mortgages had their conditions changed, 35.3 percent more than last year – 32,379 of these were changes in the conditions of a mortgage with the same institution (42.4% higher), mostly being attributed to mortgage payers taking advantage of lower interest rates and longer terms.

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February 5th, 2010

Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.8% in January compared to the previous month. It now stands at 1.232%, the second lowest level on record.

Last month I reported that Euribor rose a fraction in December, suggesting that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January, that is still probably the case. Flipping around is often consistent with a period of change.

After January’s fall, Euribor is now 53% lower than it was a year ago. That means borrowers on annually resetting mortgages can expect some relief in their mortgage payments. As a consequence of the latest reduction in Euribor, repayments on a typical mortgage (150,000 Euros, 25 years, Euribor +0.75%) will fall by around 100 Euros a month, or 1,200 Euros a year.

Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. By March borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower.

Story by Mark Stucklin

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