Mortgage availability behind uptick in Spanish property market

Looser lending criteria is meaning more mortgages are being issued right across Spain.

Official data from Spain’s notaries published last week has revealed that the number of property transactions in Spain in the second quarter of the year rose once more in all 17 Spanish regions except for Navarra.

Driving this upturn is the easier availability of Spanish mortgages, with the number of mortgages granted in the country between April and June rising 26% on the same period last year…

Equally, the value of the average mortgage lent to customers also increased, reflecting not only improved lending criteria and a stronger economy, but also the rising property values recorded across most parts of the country.

According to the data, Andalucía – home to the Costa del Sol – has experienced the sharpest and most sustained increase in property prices. Homes in the region rose in value by an average of 2.7% in the second quarter of the year, which was above the national average increase of 1%, and rivalled increases recorded in the Balearics and Extremadura.

In terms of transaction volume, nationally there were 11.9% more homes sold across Spain in the second quarter of this year compared to last. Andalucía once again outperformed the average, but it was the La Rioja region that saw the strongest improvement – a 38% increase on 2014.

A proposed tweak in Spain’s mortgage laws could also help deliver more transparency to the sector, which in turn may improve the property market. The European Commission has urged Spanish banks to repay mortgage customers that were forced to take out mortgages that had a ‘mortgage floor’ – a minimum interest rate clause that stopped rates dropping below a certain level.

The Supreme Court of Spain ruled these mortgages invalid in 2013 as many had been mis-sold to customers. The EU now believes that those customers should be repaid their interest payments in full, and all Spanish banks have since gone through the costly removal of such clauses in their mortgages.

These changes are delivering more maturation and transparency to the Spanish mortgage sector, and this is likely to have a positive impact on the recovering strength of the Spanish property market.