MORTGAGE MARKET IN Q1 2021: Recovery stronger than expected!

 

A summary of the Spanish mortgage market figures published in the first quarter of 2021 – interest rates, mortgage values and the new Spanish mortgage loan volumes – to give you an idea of what's on the mortgage market, which is an important part of the home market. sale qatar

Euribor / Spanish mortgage base rates

The 12-month Euribor, the baseline of interest payments on the majority of the mortgages in Spain, was -0.486 as a quarter monthly average (see figure above) compared to -0.266 the same month a year earlier, which is 83 percent lower than 12 months earlier than the previous quarter.

Borrowers in Spain would have experienced their monthly repayment of around €11 per month with an annual reset of Spanish mortgages, based on Euribor, with a typical €120,000 loan with a 20-year term.

As you can see from the above chart, in the first half of last year euribor climbed into positive terrain before plunging into record drops in January of this year and then descending. The obvious reason for this is the coronavirus pandemic and the central banks' response.

Looking at the evolution of euribor during the last decade in the following chart, one can see clearly how the economic crisis has dropped rates over the years into negative territory, and then the pandemic has pushed them back down as it looked like they were recovering.

Euribor 10 years q1 2021 Spanish mortgage market

All good news for borrowers, particularly those who did not suffer financially from Covid-19.

Q1 2021 Spanish mortgage loans

In a quarter, 71 275 new residential mortgages were signed by the Association of Spanish Notaries, up 18.7 percent over the same period last year when mortgage lending was repressed at the beginning of the pandemic and lock-down. In Q2, the annualized increase is expected to be even greater.

The average new mortgage loan value was €140,856, down by 1.9% from last year's average.

Spanish hypothecary market q1 2021

The overall image from the mortgage market is rather like the housing market, one of the stronger than anticipated recovery as the pandemic emerges and good conditions for solvent borrowers. I was pessimistic about the outlook last year when I looked at Q3, which was much better than I expected on the short term. But in view of the massive amounts of public debt that partly underpin this recovery, the economic crisis has been averted still far too early. It's still early days.

A series of graphs showing the growth of domestic sales on the coasts and islands during the coronavirus pandemic using the latest numbers.

Home sales in Spain rebounded strongly in March when most of the world remained at home because of the lockout in the same month last year. If you look at figures for a selection of the most popular islands and coasts that are attractive to foreign investors, it is broadly similar, although some areas do better than others.

The table above shows how March sold compared to last year in the same month. In Andalusia, in the Costa de la Luz province of Huelva, a spectacular 78% increase was observed, bearing in mind that this is a small market where modest sales may result in a large percentage change.

The Balearics and Tenerife were at the other end of the scale in the Canaries, where sales in March fell below the lockdown of March, for reasons which I have yet to investigate.

Province of Alicante, home of the popular Costa Blanca, shows signs of a poor recovery and sales in March only increased by 6%, but most other coasts and areas had double digit sales, which were on the cards. The Spanish capital is recovering strongly with sales up 71%

Where do we go? It depends on the progress of the pandemic, Brexit and the European economy, all of which contribute to influencing demand. As you can see from the charts below, however, some areas are recovering faster than others with monthly turnover during the last two years (left axis) and annualized sales changes every month (right axis). The most successful are Malaga / Costa del Sol, Girona / Costa Brava and Barcelona, and Alicante / Costa Blanca are lagging behind.