Spain’s current record low mortgage rates are encouraging overseas buyers to continue to enter the country’s property buyer.
In November, the Euribor (the rate commonly used to set mortgage interest payments in Spain) fell to a record low of.0.335 per cent, prompting a surge in overseas interest in the country’s property market.
This increased interest is almost certain to build on what has already bee n a positive few months for the country’s property market. Recent data from Spain’s National Statistics Institute (NIE) shows that the number of mortgages constituted in September was up 29.8 per cent on the year before. This follows year-on-year increases in June, July and August 2014, of 19 per cent, 28.8 per cent and 24 per cent respectively.
So just what does this mean for those considering heading off to Spain for a new life?
“Quite simply, better access to finance means more sales to both domestic and overseas buyers,” explains Martin Dell, Director of one of Spain’s leading property portal, Kyero.com. “More than 90 per cent of Spanish mortgages are based on Euribor which is at its lowest ever rate. This means huge savings for long term borrowers, tempting many to take out mortgages to buy their dream home.”
Getting a mortgage in Spain is in many ways similar to obtaining one in the UK, with a similar level of paperwork required. Risk assessment tends to be carried out on a debt-to-income basis, a model that is beginning to be adopted by UK banks as well. Spanish mortgages can be taken out up to the age of 75.
According to NIE figures for October, Spanish property market sales grew 20 per cent year-on-year. October year-to-date sales are up 16 per cent in Costa de la Luz, 15 per cent in the Costa del Sol, 14 per cent in the Balearic Islands and 8 per cent in the Canary Islands, with all markets being driven by foreign buyers of second homes.
“These figures suggest 2014 has witnessed a full-throated recovery in these areas, driven by foreign demand. These figures bode well for the property market in prime areas of Spanish cities and the coast in 2015,” said Mark Stucklin from the Spanish Property Insight website.
Article published 18th December 2014