THE mortgage market has still been functioning during the current crisis (albeit at a slightly slower pace), supporting the property sales that are still taking place.

As Spain slowly eases itself out of lockdown, already this month, we have seen a very clear uptick in enquiries.

This suggests that there may be light at the end of the coronavirus tunnel for the Spanish property market, although what that will look like is anybody’s guess as any market bounceback will depend on how long the lockdown lasts. 

If we come out of it soon, there is a good chance that the market suffers only a temporary setback. However, if the crisis lasts much longer, companies will be damaged to the point they cannot be saved and large-scale unemployment would be the natural consequence. In that scenario the market will certainly suffer, as the prospect of house-hunting may become unthinkable for many.

The recent announcement that only 51% of Spain’s population is entering Phase 1 of the de-escalation plan, could spell serious trouble for employment, as businesses remain frozen.

The full impact of coronavirus on the mortgage market will not be apparent for some time. However, one early symptom of the uncertainty is the rise in Euribor (Euro Interbank Offer Rate), which determines the value of mortgage repayments. Lenders in Spain generally use the 12-month Euribor rate, which has risen, meaning that repayments have become more expensive. The 12-month Euribor rose from an average of -0.266% in March to -0.108% in April. This reset is a slight rise when compared with the rate of -0.112% a year ago in April 2019.

this could also discourage buyers, although we have not seen a huge impact on the lending market as of yet. The latest data from the Association of Spanish Notaries shows a 0.6% decrease in new mortgages for February. We do not have the figures for the worst months of the crisis yet, so will have to sit tight for now and hope the Government is able to further loosen lockdown.

The Finance Bureau has more than 15 years’ experience in finding expats the best deal possible. We will help them make sure they’re avoiding the many pitfalls associated with buying abroad, especially during the current crisis.

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