Spanish mortgage market heats up

Costa del Sol, Spain Photo: Dan.Kristiansen

New mortgages for Spanish homes rose by 1.6 per cent in volume in 2014, according to data from the Spanish National Statistics Institute, as the market heats up in the wake of an influx of capital from overseas buyers looking to pick up a holiday home at rock bottom price.

Both domestic and non-resident buyers are benefitting, as Mortgage Direct's Kevin Monger observes: "The market is definitely heating up. Banks are very keen to lend, so inevitably they have become more flexible and are offering better conditions. The conditions we can offer our non-resident clients are now quite similar to those we can offer to Spanish residents/nationals, which is unprecedented in our experience."
 
This eagerness to lend - and to clear distressed properties from their books - has seen one bank offering 100 per cent mortgages for new properties, with an additional cashback option of up to 13 per cent. Variable rate mortgages are de rigueur in Spain, with over 95 per cent of customers opting for them, according to Mortgage Direct. While fixed rate mortgages are popular in countries such as the UK, in Spain they remain largely uncompetitive with variable rate options, which tend to offer rates of at least 2 per cent
 
With overseas buyers included in those able to benefit from mortgages available in Spain, the options facing would-be holiday home owners have improved dramatically over the past year.

Martin Dell, Director of leading Spanish property portal Kyero.com, comments: "As well as the traditional British market, Spain is also attracting buyers from an increasing number of French speaking countries, as well as further afield. It is a perennially popular country, offering an excellent cuisine, welcoming climate and some of Europe's most delightful architecture. Second home owners look to Spain for everything from exquisite city apartments in the finest locations to luxury island villas with unrivalled sea views."

Many buyers are specific in their mortgage requirements, adds Monger: "We do notice that a lot of clients from France and French-speakers from Belgium and Switzerland ask about fixed rates and interest rate caps. Fixed rate mortgages are more prevalent in these countries compared to Spain."