Posted on July 21, 2016 in Property
According to the latest quarterly report published by the Spanish Mortgage Association (AHE), some 57.3% of the new mortgages contracted in May were of fixed or mixed interest rate types, while the remaining 42.7% were variable rate mortgages.
The AHE pointed out that the fixed rate mortgages “are gaining ground” due to the advantages they offer in terms of stability, both to the mortgage holder and the financial institutions in an environment of low interest rates.
Specifically, 31.4% of the mortgages formalised in May were made with a fixed rate of over 10 years, while 25.9% had an initial fixed rate of between one and 10 years, and the remaining 42.7%, had a variable interest rate of less than one year. The Association also highlighted the increase in the number of loans with a fixed rate to term, which accounted for 31.4% of the transactions, compared with 4.95% in 2015.
Moreover, El Mundo reported that the outstanding mortgage balance registered in April 2016, the latest data available, shows a year-on-year decline of 3.41%, to 673,983 million euros. The AHE stated that: “Since the process of adjustment in the Spanish mortgage market began in 2010, the outstanding mortgage balance has continued to decrease at a sustained pace. However, the latest data shows a clear trend of deceleration, which indicates that this process is in its final phase.”
The report shows the same behaviour in the managed mortgage credit balance, which in April stood at 684,132 million euros, representing a drop of 3.6%, year-on-year.
As with the mortgage lending balance, the real estate credit balance in Spain has experienced a similar adjustment process. Thus, the total real estate credit balance maintained the same trend observed in earlier periods, standing at 716,373 million euros in the first quarter of the year, representing a year-on-year decrease of 6.47%.
By sectors, the real estate household credit balance, which accounted for 76.3% of the total real estate credit, decreased by 4.7%, to 546,795 million euros. Credit for real estate activities, representing 17.9% of the total real estate credit, decreased by 11.9% in March, to 128,106 million euros. In addition, credit for construction activities recorded a reduction of 10.9%, with a balance of 41,472 million euros.