Euribor 12 months, the interest rate predominantly used to calculate mortgage payments in Spain, rose 2% in May compared to the previous month, taking it up to 1.249%, the highest level it has been since last September. This is the first time since July 2008 that Euribor has risen for 2 consecutive months.

Despite rising for 2 months, Euribor is still not far above the record low of 1.215 it hit in March. It is still 24% lower than it was a year ago, and 77% lower than it was in July 2008. Because Euribor is still lower than it was a year ago, repayments on a typical annually resetting mortgage (120,000 Euros, 25 years, Euribor +0.8%) will fall to around €510/month, saving 24 Euros a month, or 288 Euros a year. If Euribor keeps rising, it won’t be long now before borrowers starting seeing their monthly payments increase, albeit modestly at first.

Euribor is an interbank lending rate based on interest rates set by the European Central Bank (ECB). Base rates are currently at 1% but the ECB is expected to put them up during the course of 2010. Even though base rates haven’t yet been touched, Euribor is starting to rise as banks get nervous about the state of the economy and lending to each other.

Story by Mark Stucklin

Tags: Euribor, Interest Rates
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Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, rose 0.8% in April compared to the previous month, taking it back to 1.225% where it was in February. This is only the second time Euribor has risen on a monthly basis since September 2008.

Despite the rise in April, Euribor is still just a fraction above the record low it hit in March. It is still 31% lower than it was a year ago, and 77% lower than it was in July 2008. Because Euribor is still lower than it was a year ago, repayments on a typical annually resetting mortgage (120,000 Euros, 25 years, Euribor +0.8%) will fall by around 41 Euros a month, or 420 Euros a year.

Many experts think that Euribor has fallen as far as it can and expect rates to start rising modestly. It won’t be long now before borrowers starting seeing their monthly payments rise, albeit a small amount. Euribor is based on interest rates set by the European Central Bank. Base rates are currently at 1% but are expected to rise gradually during the course of 2010.

New mortgage lending rose 8.5% in February compared to the same month last year, according to figures from the National Institute of Statistics (INE). That is the second consecutive month of growth in mortgage lending, a good sign for the market. On a monthly basis there were 54,813 new mortgages signed in February, up 6.2% compared to January.

The average loan value was 118,185 Euros, a fall of 4.6% compared to last year. Overall new mortgage lending was 6.478 billion Euros, up 3.5% on last year. The average interest rate was 3.97, 26.5% below a year ago, and 2% lower than January.

Tags: Euribor, Interest Rates, Mortgage Lending
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Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.8% in March compared to the previous month, finishing at 1.215%. Once again, Euribor is at the lowest level on record, down 36% in 12 months, and 77% down from its all time high of 5.393% in July 2008. Thanks to the latest reduction in Euribor, repayments on a typical annually resetting mortgage (120,000 Euros, 25 years, Euribor +0.8%) will fall by around 41 Euros a month, or 500 Euros a year.

When Euribor rose a fraction in December I suggested that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January, February, and March, that still probably holds true. Flipping around is often consistent with a period of change.

Most of the savings from the fall in Euribor have already been had, and Euribor is unlikely to go much lower. Next month borrowers on annually resetting mortgages will hardly notice any savings, even if Euribor goes a bit lower. Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.

New mortgage approvals rose 2.3% to 53,747 in January compared to the same month last year, after an annualised fall of 1.3% in December, showing there is not yet a clear trend towards improvement. On a monthly basis, new mortgage lending was up 12.3% in January. The average mortgage value was 112,839 in January, 7.6% lower than January 2009. Overall new lending was down 5.5% to 6.064 billion Euros.

Story by Mark Stucklin

Tags: Euribor, Interest Rates
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The report from Savills International Research revealed how far the overseas property market in the UK had fallen over the last year. Just 2% of the 430,000 foreign-home owners in the UK bought their property in 2009, compared to 70% who bought between 2003 and 2008.

“By spring 2009 Savills International noted that interest in international holiday homes had returned, albeit at far lower levels than previous years,” said the report. “The market has now reverted back to traditional, end-user buyers (as opposed to investors), and mostly in traditional, established hotspots.”

The high number of distressed sales that have contributed to oversupply and falling prices has helped keep pure investors out of the market, it added. “In contrast to previous years, investors solely seeking to capitalise on upward price movement are no longer active in the market place.”

Savills’ head of international, Charles Weston-Baker, told OPP that mid-market buyers had also started to return to the market. “We have started to see more grassroots sales coming through,” he said. “The very top of the market has largely been unaffected, but now end-users who are looking for lower-priced but quality property are buying to enjoy the product.

“We’ve also noticed how important sport has become to buyers, especially for baby boomers and those retiring. There’s a new enthusiasm for experiential holidays and buyers need a reason to be somewhere, such as golf or horseriding. We seem to have jumped 20 years in aging, where people are slowing down at 80 rather than 60.”

The report predicts another quiet year for the UK holiday home market, with most sales taking place to high-income lifestyle buyers in traditional locations, with little activity in the speculative or off-plan markets.

The proportion of people buying in major cities and in villages grew substantially at the expense of smaller towns and isolated rural locations. The popularity of purpose-built resorts also increased.

“This reflects not only the growth in preference for such developments but also the rise in quality and quantity of such communities,” said the report. Interest in buying property to renovate or improve also fell, mirroring the rise in resorts where ready-to-go homes maximise letting potential.

Savills’ market has become skewed towards mid-to-top end buyers, and properties worth more than £200,000 now form the majority of purchases, with a particular fall in popularity of homes worth less than £100,000.

Story from OPP (registration)

Tags: buying property in Spain, Euribor, Property market trends, Spanish property
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Euribor (12 months), the interest rate normally used to calculate mortgage payments in Spain, fell 0.6% in February compared to the previous month. Euribor now stands at 1.225%, the lowest level on record. Euribor is 43% down over 12 months, and 77% down from its all time high of 5.393% in July 2008.

As a consequence of the latest reduction in Euribor, repayments on a typical annually resetting mortgage (150,000 euros, 25 years, Euribor +0.75%) will fall by around 65 Euros a month, or 780 euros a year.

When Euribor rose a fraction in December I suggested that, after 14 consecutive months of falls, a change of trend might be in the offing. Despite a return to declines in January and February, that still probably holds true. Flipping around is often consistent with a period of change.

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.

Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.

Story by Mark Stucklin

Tags: Euribor, Interest Rates
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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.

Tags: Euribor, Interest Rates
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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

Tags: Euribor, Interest Rates
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Euribor 12 months, the interest rate normally used to calculate mortgage payments in Spain, rose 0.9% in December compared to the previous month, finishing the year at 1.242%. This was the first monthly rise in Euribor in 14 months, suggesting that a change in tendency is on the way. But despite the increase in December, Euribor is still 64% lower than it was 12 months ago. That means borrowers on annually resetting mortgages can expect some relief in their future mortgage payments. Euribor is based on interest rates set by the European Central Bank. Base rates are expected to remain at 1% for the first quarter of 2010, rising gradually after that.

The volume of new residential mortgages signed in October was 52,451, down 18% compared to the same month last year, and 16% compared to September, according to the latest figures from the INE. In value terms new residential mortgages were down 31% to 6 billion Euros. New mortgage signings in Spain have now fallen for 28 consecutive months, often by double digits. That illustrates the severity of Spain’s property crash, even if official figures disguise the extent to which property prices have fallen. The average new mortgage value also fell, by 15.8% to 113,882 Euros.

Story by Mark Stucklin

Tags: Euribor, Interest Rates
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Euribor 12 months, the interest rate normally used to calculate mortgage payments in Spain, fell 1 % in November to a new record low of 1.231 %. Euribor has now fallen for 14 consecutive months, and is 72 % lower than it was a year ago. As a consequence of the latest reduction in Euribor, repayments on a typical annually-resetting mortgage (140,000 euros, 25 years, Euribor + 0.5 %) will fall by around 240 Euros a month, or 2,800 euros a year.

Economic analysts expect Euribor to stay around current low levels in the months to come. Both Jean Claude Trichet, president of the ECB and Miguel Ángel Fernández Ordóñez, governor of the Bank of Spain, have said that current base rates are at the “appropriate level”.

The volume of new residential mortgages signed in September was 62,411, down 4.2 % compared to the same month last year. In value terms new residential mortgages were down 16 % to 7.3 billion euros.
The good news is the decline in new mortgage lending has been bottoming out in the last few months. It fell 31 % in June, 19 % in July, 7 % in August, and 4 % in September. If the trend continues new mortgage lending will soon be growing again year-on-year in volume terms. That will give some support to the housing market.

Story by Mark Stucklin

Tags: Euribor, Interest Rates
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I recently read an interesting interview with Mikel Echavarren, head of Irea, a Spanish real estate consultancy, talking about the state of the real estate sector in Spain. As an experienced professional in touch with many different companies in the sector it is worth listening to what he has to say. Here is a selection of comments from his Q&A with Idealista News, the news section of the property portal Idealista.

Do you think there are any good investment opportunities in Spanish real estate today?
I think so but they are risky. In three years we’ll probably be kicking ourselves for not advising investors to invest now. There aren’t many opportunities in commercial real estate because there isn’t much product and rents haven’t yet adjusted. In residential, on the other hand, the correction has been very strong and fast. The ideal profile now is an opportunistic investor buying properties off banks by taking on the existing debt, a type of real estate venture capital.

So you think there are opportunities in a residential sector because the adjustment has already taken place?
There are hundreds of thousands of possible transactions, but not many genuine opportunities. What there is not is any financing, so anyone who wants to take advantage of this market has to take the debt with the asset, but there are still very few people prepared to do that today.

Has the price of housing and land touched bottom?
House prices touched bottom some time ago, they have already fallen all they had to fall. And the price of land has fallen faster than house prices although it could even fall a bit more. We have been saying at the top of our lungs that the price statistics published by the government are worthless, and damaging to the sector because they give international analysts the impression we are a country of idiots. In the US and the UK prices have fallen around 20% from the peak whilst here we have only fallen by 8%. We work with close to 28 property companies that have been restructured, and you see that valuations are down 30% in 2 years, and then banks buy those assets with discounts of 10-15% off valuations.

Do you think there is any residential property that will never sell?
What there is is a stock of land that will never be sold, at least not in 10 years. There are areas of Spain where the town plans look like they were designed for an invasion of extraterrestrials, parts of Almeria, Murcia and Alicante. There is an overdose of land that will lie in the warehouses of banks for many years. On the other hand, the stock of finished property will be absorbed sooner.

Is there any real demand for housing at the moment?
Yes, quite a few homes are being sold. We would have to place it at more than 200,000 homes a year. What is not selling is off-plan, as there you take the risk of the developer or builder going bankrupt. It’s a good time to buy newly built homes with Euribor at 1.24%. They won’t be any cheaper next year. And when prices start to rise they will do so at a rate of 10% per year.

How does one get the Spanish property sector to recover?
The residential sector is already recovering, just not the developers, who won’t see the light at the end of the tunnel for three years; it is very bleak for them. Clients of ours tell us they have sold a lot this summer, and some banks tell us that they have had more mortgage requests this summer than in all 2009. Furthermore, we believe that developers have dropped their prices to the minimum. There is mortgage financing available, not much, but there wasn’t any at all in 2008, and now there is. Mortgage costs are low, and it appears that the future is not going to get any worse. The recovery is underway, although this won’t show up in the official statistics until the first half of 2010. As soon as there is a general perception that things are getting better, house prices will stop falling and start rising.

Story from Idealista News

Tags: buying property in Spain, Euribor, House prices, Interest Rates, Property market trends, Realistic House Prices, Recovery, Spanish property
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