Spanish mortgage market heats up, with ‘unprecedented’ opportunities for overseas buyers
- New mortgages up 1.6% in 2014 (Spanish National Statistics Institute)
- Variable rate mortgages trump fixed rates in Spain, with more than 2% difference (Mortgage Direct)
- Leading portal Kyero.com now lists upwards of 200k properties
New mortgages for Spanish homes rose by 1.6% in volume in 2014, according to data from the Spanish National Statistics Institute, as the market heats up nicely 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% mortgages for new properties, with an additional cashback option of up to 13%. Variable rate mortgages are de rigueur in Spain, with over 95% 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% lower.
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, which now lists more than 200,000 homes from 3,000 estate agents, 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, as Kevin Monger points out,
“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.”
However, just because they are technically available to foreign buyers doesn’t necessarily mean that those buyers are in for an easy time when it comes to obtaining a Spanish mortgage. Many mortgages for non-residents are complex and time-consuming to apply for and their conditions may change over the lifetime of the mortgage.
“Be sure to consider a range of borrowing options before you commit to buy,” suggests Kyero’s Martin Dell. “Think through the advantages of obtaining a mortgage in your own country as well as those of a mortgage here in Spain. Fixed rate mortgages in Spain, for example, are less attractive for many overseas buyers than they are for Spanish nationals. They are also less attractive than variable rate mortgages, so borrowers need to consider their interest rates carefully and ensure that they shop around for the right mortgage product. Once that part is sorted out, all they need to do is shop around on Kyero for the perfect holiday home in the Spanish sunshine!”
To view properties across Spain available for sale and to keep up to date with the latest in Spanish property trends, visit www.kyero.com.