Mortgage base rates in the Eurozone dropped to another record low in July 2017, whilst the latest data shows new mortgage lending returned to growth in May, having declined in April, most likely due to seasonality.

12-month Euribor – the rate used to calculate the majority of mortgage interest payments in Spain – came in at -0.154 in July, compared to -0.056 in June, a percentage difference of 3.4% (and 175% compared to July 2016)

As a result, borrowers in Spain with an annually resetting Spanish mortgage will see their mortgage payments fall by around €5 per month for a typical €120,000 loan with a 20 year term.

New Spanish mortgage lending rises in May

New residential mortgage lending was up by 9.2% in May to 29,012 new loans, show the latest figures from the National Institute of Statistics (INE).

New lending fell by 11.4% in April having risen almost every month for the last three years, but April’s decline was almost certainly due to seasonality and Easter reducing the number of business days in April compared to the previous year. The underlying trend in mortgage lending is upwards, and is one of the key factors driving a housing market recovery in many coastal areas and cities. Another key factor is rising foreign demand.

The average new mortgage loan value rose 7.6% to €113,645, and the average interest rate dropped to 2.9% (the first time it has fallen below 3% – see chart below), an annualised decline of 8.4%. The average term was 23 years, and 61.3% were variable rate, and 38.7% fixed rate.

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