Return of the borrowers

Year ahead looks to be good for lending, writes The Finance Bureau’s mortgage expert Tancrede de Pola

LAST UPDATED: 14 Feb, 2015 @ 09:53
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OPTIMISTIC: Tancrede de Pola
OPTIMISTIC: Tancrede de Pola

AFTER seven years in the dark, the property market is finally awakening.

Banks are lending again, mortgage rates are down and borrowers can at last see the light at the end of the tunnel.

As the old adage goes: “The time to act is now!”

This January has – without a doubt – been the best January for borrowing since the economic crisis hit Spain in 2007.

Long may that continue. I predict that 2015 will be a much stronger year for both lenders and borrowers.

With a stabilising property market and mortgage rates as low as 2.1%, the opportunity to borrow in Spain has not looked this good for a long time.

Spain’s mortgage rates are now inline with the UK and France, between 2.1% and 3.5%. Compare that to this time last year – when rates were as high as 5.5% – it’s clear to see things are moving in an encouraging direction.

And the banks are at last looking to clients that would have previously be considered ‘unsafe’ or ‘risky’ to lend to, such as self-employed investors and non European nationals.

This is not to say that they are now taking risks. They are taking as little risk as they were last year, or the year before that with conservative loan-to-value mortgages.

This is due to a recovering economy and – even more importantly – a more stable property market.

A more stable property market, leads to greater mortgage lending which leads to higher house prices, which leads to an even more stable property market… creating a virtuous circle.

So, things are definitely looking up. Roll on the rest of the year!

 

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28 COMMENTS

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  1. This article may well be relevant to the domestic Spanish property market in places like Madrid and Barcelona but it has very little to do with the market in the areas that this newspaper covers and it is worth noting that the two property markets are very different. Also, most foreigners buying property in Spain re-mortgage their residential property in their home country, they don’t take out mortgages in Spain.

    The tourist property market, which is the market that interests most OP readers, is not in a virtuous circle, it is in a vicious circle. Falling prices, massive oversupply/lack of demand and serious legality issues have led to the much publicised demolitions and this has scared off thousands of foreign investors who might otherwise have bought property in Spain. These demolition horror stories do not just affect Andalucía, they affect other tourist regions of Spain as well – people just hear the words “Spain” and “demolition” and run a mile.

    Unless and until the so called illegal property situation is addressed and the law is changed, this important part of the Spanish property market/economy will continue to flat line and Andalucía will remain the poorest performing region in Spain with frightening levels of unemployment, zero growth and a shrinking population.

  2. Foreign investment in Spanish property is rising – contrary to the doomster post given by “Jane.”. For example this report from 2014 “Foreign investment has gone from around €3.5 billion in 2009, to €6.5 billion last year, and they forecast it will top €7 billion this year, up 16% on last year and double the level of 2009.” The trend will no doubt continue in 2015 with a lower Euro and lower oil prices feeding the growth in the economy – the estimate is that the Spanish economy will now grow 2.7% in 2015. Read the facts and the trends, before believing the opinions of anonymous posters – and that goes equally for myself as per other posters here.

    • At least I use my real name and don’t hide behind various aliases. May I suggest you lose the rose tinted glasses, it’s not helping other readers and it can’t be doing you much good either.

      • Good point Jane. “Squiddy” has already used three aliases on here to my knowledge and was even found out when he accidentally updated his Gravatar with the same email address and a different alias. Amazingly, this person also has a failed business venture in Spain and yet talks up the market as if it’s a great place to do business. People need to remember that the next time they read his posts as he is the one who is hiding behind fake identities. Case over I think, lol.

  3. I met the writer of this column last year and he had a proper beard. Now it seems his beard has disappeared. What does this say about the current Andalucia property market? If he were to grow it back, I might feel more optimistic about investing as it really suited him.

  4. Troll alert! Again GUAQ EDS ED Marcos etc takes a topic off subject. Re the Andalucian market, he has not even been to Andalucia.

    Yes Jane you are correct!

  5. Everywhere is losing foreign residents, just look at the latest empadriamento figures. For example, Nerja has “lost” 2500 residents. Everyone wants out of Spain, and people need to ask why this is happening. The figures speak for themselves, and to end up with a mortgaged property in Spain must honestly rank as one of the most stupid investment decisions you can make in 2015.

  6. This is really good news for Spain and from general reports and stock market indications all across Europe things are looking better.

  7. I wonder which American publications recently reported “Spain enters virtuous circle”? I’d advise readers here not to bother paying attention to jibes and lies from the likes of “Fred” and “Mike” (imagine accusing people of never having been to Andulucia – I know Granada well!), but to pay attention to the facts. Foreign investment up and rising. The granting of mortgages within Spain has also risen for 6 months running. Growth, already being seen in the general economy is expected to be still higher thanks to lower oil prices and a cheaper euro. It’s very noticeable that the doomsters can’t find one fact or recent article claiming otherwise.

    • The foreign exodus from Spain is well documented and was covered in several national newspapers just recently – simple facts. Only a fool would bet on long-term investment in a country just because oil prices are currently low and because exchange rates hit a blip. Those things won’t stay that way forever. Spain remains a very high risk investment given its apalling planning system and corruption, neither of which have been fixed.

  8. GUAQ EDS ED MARCOS ETC Why do you live in London then, you couldn’t make it work in Spain not once, but twice? Why do you want ‘a quid’, why not ‘a euro’?

    Fred is absolutely correct about the foreign exodus from Spain, as well as their own nationals, and met a couple the other day who left Spain because their property had fallen so much in price they’ve lost their investment, now having to live on a mobile home park in UK. They know plenty of others in similar position.

    BTW Why do post under sooooooooo many names on different sites about Spain from London who are you trying to be or kid??????

  9. Spain is not a place to invest in, property or otherwise but if you are after a holiday home in the sun and money is not an issue then it is not a bad place for this purpose if you can buy a legal home, but of course there are thousands of properties that are illegal so that will hold most back. BTW, I took out a mortgage on a property in Spain when I was young, a bit over 30 years old, finished now but of course if you are retiring you are probably too old to get a mortgage and probably don’t want or need one. Just a thought, if a bank lend money for a mortgage I believe they would carry out certain checks on what they are lending the money on, is it on the ‘books’ etc or would they lend on a property that has no valid escritura. I know the Priors had an escritura but do many of the illegal properties have a full legal escritura? Just asking.

  10. There is no doubt that foreign investment in Spain is rising – and it’s also the case that mortgage approvals from Spanish are also rising. Instead of bawling personal abuse at people who point these facts out, can the doomsters tell us why they are so averse to the Spanish recovering? I appreciate they want 40 million Spanish to suffer (and they must be building up huge negative karma because of this), but it’s also expat property owners who need to sell. Of course there is a big argument against buying – rents are (currently) low, and maybe it’s not a great idea if you only want to be in the country a couple of years. But as a long term investment I can’t see how it’s worse to buy a decent apartment for £120k in Spain as opposed to a £500k property in London that could well be hit by the forthcoming mansion tax (not to mention existing council tax). Bubbles always burst in the end – it’s happened in Ireland and Spain where the market is now recovering. Check the low level of transaction levels in the UK before overpaying.

    • Of course we want Spain to recover, but at the same time people must hear the realities of the country too. The risks involved in purchasing in Spain and the UK are worlds apart. Spain has poor infrastructure, poor data accuracy and poorly implemented laws and consumer protection. It is a far greater risk purchasing rural property in Spain than it is in the UK. It is unlikely that any Spanish recovery willl change these things. Comparing Spain and London is also totally ridiculous , and quickly reveals the lack of real-world knowledge of the poster.

  11. I limit my business interests in Spain to a Spanish clientele now – I find them far better prospects than the expat population (and for that reason I won’t be divulging the details here). So that rules out Benidorm and possibly Barcelona too – although I’ve heard that airbnb people who operate under the radar are cleaning up there. It explains perhaps why property prices are on the up there.

  12. Mansion tax does not start at £500k in London, that is a 2 bed apartment. 16 years ago I purchased an apartment in Spain, it has roughly doubled in that time, in the UK I would have quadrupled my money so for investment purposes Spain is a dog and many have properties that are illegal and worthless at the moment. I do not regret buying it as I have had some good times and was only ever intended as an investment in the quality of my lifestyle. IN that time the local area has improved immensely.

  13. A decent apartment for €120K LOL.

    I’m debating right now whether to buy land to build a house for €15-25K (700-1500sq.m) and build costs of max. €80K and constructed to Scandinavian standards or one of the completely refurbished French owned holiday homes – around 2000sq.m of land and 3+bedrooms, garage (sometimes double) and huge caves and atelier (workshop) with nothing to do INTRO €120-180K and not to forget these are asking prices not actual prices acheived.

    I could deal with the lack of real insulation quite easily and cheaply because I know what to do to rectify this common problem but I’m still left with a house and land that are far more than we need.

    I still lean towards a self build because I will have exactly what I want. What I will not have in any way shape or form with either choice are any legal issues.

    John Lightfoot – are you squiddies brother by any chance. Euro plunging, which means inflation on imports. Economies on the brink of recession and not just Greece with enormous state and personal debt mountains – yeah Europe’s doing just great.

    Prices are still falling in rural France as the French try unload their holiday homes and the Brits can’t sell even though many have dropped their asking prices by as much as 40%.
    With the exception of the major employment areas/cities French property prices have been adjusting to reality over 5 years now. The UK market is barking and heading for a huge fall. Spain – well others have said it all.

  14. No I am not his brother, but I must admit that everywhere you look people are saying things are getting better except for you and a few others on here.
    Other than that I have done lots of research into Straw bale houses and one thing you do not have to worry about is insulation as straw bales exceed any standard you want to look at. Two councils in the UK have now built straw bale houses and there is a good chance it will become more mainstream over the next few years.

  15. For once there is a lot of sense in what Stuart writes. What he omits is that various media are reporting increasing growth in Spain – it doesn’t matter whether it’s Reuters, the Economist or Business Insider – they all recognise something is gaining ground. Perhaps they have adapted well to the discipline of the Euro?

  16. Just to add – although many people may say the price of being in the Euro has been too high, it’s hard to find many people in Spain who’d really want to go back now to an independent currency controlled by the PP (or PSOE or Podemos for that matter).

  17. J/L and your construction experience is? Everyone is saying things are getting better – maybe in another dimension. It’s been very good for 5 years now for the 1% and their cronies now tell us how many have come to the end of their credit lines, maxed out on their c/cards – yes things are getting better LOL.

    The Euro was flawed in the design stage, impossible to work with so much disparity between economies and the initial interest rate set to suit German exports and no one else -basic common sense economics was flushed down the toilet and just look at the result. Only massive hubris from the parasitic political class keeps it barely alive.

    Remember the massive bailout was’nt for the Greeks, it was to save the German and French banks, the same as that idiot Brown did for the UK banks and tell me how well the sale of over 1 million properties in Spain is going. If the Greeks remain strong and refuse to play the game what then – a return to sanity accompanied by much financial bloodshed – remember a piece of paper is just a piece of paper.

  18. What posters must remember about GUAQ ED EDS DBM99 Stevie deluxe etc is that for many years now he posts under multiple aliases to get his big-up rosy Spain propaganda heard, and on various websites. Why would anyone need so many names and websites to do that apart, as well as take subjects off topic so often apart from trolls?

    Also, he likes to advise start-ups in Spain etc but why would anyone want to take advice from a man who’s own start-up in Madrid failed so soon and who now does the same from an insalubrious part of London at 3 for £4, hardly the credentials needed for serious advice!

    Whilst others here explain the pitfalls based on their own experiences that befall so many people, he never does, why not? Why trust someone who tweets English estate agent/website friends who make their money from pushing Spanish property, it is biased information and has been found to be incorrect over the years and people have likely been taken in by it! Cue the ‘doomster’ rhetoric etc salvo!!

  19. Spain may have turned the corner although I am not yet sure. It makes little difference to the average expat, the majority just want to sell their property. It is certainly not the time to invest there unless you are in it just for the sake of owning a house there long term. Taxes across the board are punitive compared with the UK or USA.

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