Rise in September mortgage activity hints at underlying good health of Spanish property market

More borrowers opt for fixed rate terms as the Euribor hits record lows.

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The distortion of data during the coronavirus pandemic has made it difficult to draw valid conclusions regarding the state of the Spanish property market in 2020, but figures published this week by the governments central statistics unit could be seen as an indication that despite the coronavirus the underlying conditions remain healthy.

The figures published in December show that during September, when restrictions on movement were not in place and something resembling normality was resumed after the summer holidays, the number of mortgages registered on property purchases throughout Spain was 26,878, representing an increase of 18.4 per cent over the same month in 2019. Of course there was a significant decrease in the level of mortgage activity during the spring and early summer, but with interest rates low (the Euribor is now at -0.487 per cent, its lowest ever level) it seems that those Spaniards who are in a position to buy are not shy of doing so with the help of bank loans, and that the market remains a fundamentally active one.

The low interest rates also led as many as 44 per cent of borrowers to opt for fixed-rate terms, locking them into conditions which they hope will prove beneficial in the long term as they pay back the capital. Last September fixed rate repayment terms accounted for 36.6 per cent of all new loans.

But while conditions may be good for borrowers, they are far from ideal for lending banks, and there is currently fierce competition to attract customers among the leading such companies in Spain. This has included a cut in commissions on the part of Banco Santander and special offers from Bankinter designed specifically to attract potential mortgage clients, and the results have included a noticeable rise in the number of borrowers switching their mortgage from one bank to another. In September there were 6,946 changes in the conditions of existing mortgages, over three times as many as in the same month last year, while the number of customers taking their mortgage to another bank was 64 per cent higher at 1,187.

Source: Spain News Today, December 2020.

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