Live News From Spain As It Happens

A SHARP rise in the number of fixed-rate mortgages in Spain has been reported in the past two years – and they now account for 43% of every new loan taken out.

Until spring 2022, mortgages with an interest rate set for between two and 10 years were almost unheard-of in Spain, particularly as variable-rate loans are reviewed annually, meaning relative security in everyday financial planning.

But the unprecedented hike in the Eurozone interest rate, or Euribor, from below zero to above 4% - going from negative figures to over 3% in seven months in 2022 – have led to homebuyers opting for greater long-term stability.

Variable-rate mortgages, which follow the Euribor, are, by default, one-year fixed-rate deals, since the interest that applies is adjusted annually, meaning no unplanned monthly fluctuations to deal with.

Some loans now operate a hybrid system between fixed and variable rates, and are known as 'mixed mortgages' or hipotecas tipo mixto.

These have risen from 14% of new home loans in mid-2022 to 40% in the final quarter of 2023.

Fixed-rate mortgages with a set level of interest remaining the same for between five and 10 years are also fast becoming the norm for homebuyers – between spring 2022 and the end of 2023, they rose from 4% to 17% of new loan deals.

Altogether, mixed and fixed, with a minimum set interest rate of five years, accounted for 43% of new mortgages contracted up to the end of November 2023, according to statistics published by the Spanish Mortgage Association (Asociación Hipotecaria Española, or AHE).

A 'mixed-type' mortgage, the AHE explains, is where the interest rate remains the same for a period of between one and 10 years – effectively, a short-term fixed-rate deal – after which it reverts to a variable-rate loan.

'Pure' fixed-rate loans, with set interest rates for up to 10 years and the option to renew these once the deal expires, continue to make up a significant chunk of new mortgages – but their popularity has declined since the initial Euribor rises.

Back in June 2022, when the European Central Bank (BCE) started a chain of dramatic, consecutive monthly increases in interest, fixed-rate loans came to make up a massive 67% of new mortgage deals – but this has now dropped to 43%, amid cautious optimism that the Euribor may start to come down again as Eurozone inflation levels stabilise.

Traditionally, variable-rate loans made up the bulk of new mortgages, and those still in force since before the Euribor increases – which have not been replaced or renegotiated – as opposed to new loans continue to make up 55% of active loans.

By contrast, post-2022 new mortgage deals on a variable-rate basis only account for 16% of the total.

Read more at thinkSPAIN.com

The average Spanish resident will spend between €500 and €1,500 on their holidays this year, with three in 10 set to increase their budget from last year and 16% reducing it.

A survey by travel operator Aplázame, targeting customers aged between 18 and 65, found that a total of 55% expect to spend the same amount on their 2024 getaways as they did in 2023, that nearly four in 10 plan to take two trips this year, and three in 10 intend to take three or more trips.

Two-thirds will take their holidays in summer, which continues to be the most popular season for national or international travel.

The emphasis is more on national travel, since staycations in Spain are the highest on holidaymakers' wishlists for 2024, even if just for short breaks.

Another 44% intend to travel to another European country, specifically on the Mediterranean, whilst 20% are looking to go long-haul and visit somewhere on another continent.

When it comes to destination decisions, over three-quarters say price is the deciding factor, with four in 10 influenced by discounts or special offers, and just over a third having a set budget and intending to stick to it.

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HIGH-SPEED rail services between Spain's largest two cities and France have been snapped up by half a million passengers in less than nine months, reveals the transport board.

RENFE launched new routes on its already-popular express AVE line in summer 2023, connecting Barcelona with Lyon and Madrid with Marseille.

Both of these use the same rail link as the existing AVE service between Barcelona and Nîmes.

From all three French destinations, frequent connections run to Paris, meaning it is relatively quick and easy to get to Spain's main metropolitan areas from almost anywhere in France.

Since the new cross-border routes opened, trains have been on average 80% full, RENFE reports.

They run daily in either direction, and the rail board has 'adopted a dynamic price-setting system', it says, meaning tariffs can be easily changed to keep them competitive.

RENFE intends to increase its trans-Pyrénéen lines and become a 'key rail operator' in France, with its next step being to 'multiply its offer fourfold' by putting new trains with greater capacity in service.

Eventually, although sooner rather than later, RENFE plans to link directly to Paris from Spain, and to expand its network of destinations in France from Spain, and within France.

Until three years ago, RENFE was the sole rail operator in Spain, but once the train travel market was opened up to competition, RENFE has had to work harder to make its prices and service quality more attractive.

One of its moves in this direction was the launch of the low-cost version of the AVE, known as the AVLO – just as speedy, but with no frills, reduced luggage allowance, and 'extras' such as reserved seating and on-board WiFi coming at an additional, optional cost.

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SPAIN'S State post office has launched a new solution for passing travellers who do not want to lug their suitcases around: Lockers for bags are now provided, with prices depending upon weight.

Ideal for people on connecting flights with a long overlay who want to explore the city and get out of the airport, or for those on a shopping spree who want to go hands-free when dining or visiting key sites, the new service provided by Correos is available for anything from a couple of hours to 15 days.

Correos only specifies that bags and cases must be closed or zipped up to avoid potential disputes if anything goes missing, and that expensive jewellery, large amounts of cash, or other valuables cannot be left there.

Once the owner wants to retrieve their bags, they can do so at any time, even if the period they have signed up for has not yet expired.

A simple form is completed, usually online.

Anyone undertaking the internationally-popular pilgrimage known as the Camino de Santiago will find a network of luggage deposits along any of the routes, Correos reveals, and they can either pre-book them online or simply turn up and fill in a handwritten form.

For the Santiago de Compostela pilgrim routes, luggage deposits even include facilities for bicycles.

AN ONGOING slowdown in home sales in Spain showed signs of recovery in January – the last full month for which figures are available.

The National Statistics Institute (INE) revealed that the year-on-year decrease for the first month of 2024 was just 2.1%, marking an upturn since the closing months of 2023.

Figures for October showed a 11.1% annual reduction, followed by 8.7% in November, meaning numbers for January 2024 point at an increase in sales after a difficult final quarter.

To date, sales and purchases of residential property in Spain have shown year-on-year declines each month for the past 12 months, but market prices do not appear to have been affected by this trend.

Home values are continuing to rise, albeit gradually, but mortgage finance issues appear to be directly responsible for fewer purchases.

Banks are applying tougher conditions for granting new loans, and the unprecedently-sharp rise in Eurozone interest rates since late 2022 mean mortgages are far more expensive.

As Spanish variable-rate mortgages are typically reviewed annually and adjusted to the current Eurozone interest rates, known as the Euribor, this means the full impact of the hikes was not seen by every homeowner in Spain with a loan until the closing months of 2023.

Still in decline, but second-highest sales volume since recession

INE details show that a total of 54,346 homes were sold in Spain in January 2024 – a time which is traditionally an off-peak sales month in any case, with purchases tending to spike just before and during summer – compared with 55,496 residential property sales in January 2023.

But this shrinkage is in no way close to that seen at the beginning of the recession when home values and purchases tanked – in fact, INE data reveal that January 2024 accounted for the second-highest number of sales since the same month in 2009.

Last January saw the best results since that bleak time now 15 years ago – at the start of 2023, residential property purchases went up 4.9% year on year, despite the preceding few months showing early signs of a slowdown.

By February 2023, home sales were down 6.6% based on the same month the previous year – a drop which swelled to 15.6% by December, when only 36,698 properties were sold.

This means that, despite property market growth still being some way off, the increase in sales from month to month between December 2023 and January 2024 was an impressive 48.1%.

That said, a gulf normally exists between year-end and year-opening home sale figures, given that transactions started in the run-up to the festive season are often not closed until January, due to the inevitable reduction in all non-Christmas-related business activity during that time of year.

Read more at thinkSPAIN.com