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Is an EU Interest Rate Hike on the Horizon - Is an EU Interest Rate Hike on the Horizon?

The economic situation points to a rise in interest rates. Europe has largely recovered the GDP lost due to the pandemic; however, inflation has skyrocketed. In February, the CPI -Consumer Price Index- in Spain experienced an upward variation concerning the previous twelve months of more than 7%, a figure that wasn't that high for decades.

For its part, the US Federal Reserve already predicted a rise in interest rates at the beginning of the year, and the president of the ECB recently left the door open to it. The international outlook added to the rise in electricity, gas and fuel pricing could be the final push that leads to the decision.

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imagen objetos ingenieria punto vista top construction trabajo herramientas ingenieria vintage efecto filtro retro tono enfoque suave enfoque selec 1 - Who is mortgaged today? The transformation of the real estate market

The bursting of the housing bubble during the last crisis has transformed the real estate market in countries that suffered the heaviest price of housing. In the years prior to the Great Recession, there was a relaxation of the financial conditions that allowed young people with low wages to mortgage in the very long term with the risk that this entails. The bursting of the bubble has had serious economic consequences that have changed the behaviour of banks and families. Now, the composition of mortgaged homes has changed: the profile is a person over 40 years old and has a high level of income. This transformation of the mortgaged has also occurred in countries that did not suffer the bubble, but for different reasons.

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The number of court-ordered home evictions for non-payment of mortgages, rent or other legal reasons reached 67,189 last year, according to judicial statistics released on Friday.

46353 1285272 foto 1 300x201 - Home evictions averaged 184 a day in Spain last yearThe number of open cases – pending eviction requests – stood at 82,860, which is 9.8 percent fewer than the previous year, said the General Council of Judiciary (CGPJ) legal watchdog in its annual report.

Of the total number, 38 percent were due to non-payment of mortgages while 57 percent were for non-payment of rent. Another four percent were for other causes. The figures reflect an average of around 184 evictions per day in 2013.

A breakdown by regions shows that Catalonia had the most evictions last year (23.8 percent) followed by Valencia, Andalusia and Madrid.
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Spain’s mortgage market continues in the doldrums due to low demand because of rampant unemployment and stricter conditions imposed by the country’s banks.

house in spain 300x224 - Mortgages granted in July drop to new record lowsAccording to figures released Thursday by the National Statistics Institute (INE), the number of home loans granted by banks in July fell 42.7 percent from a year earlier to 13,777, the lowest figure since the INE began the current statistical series in 1995. Home loans granted in June were down 42.2 percent at 14,053. Mortgages disbursed have now fallen for 39 months in a row.

The amount of capital lent by banks fell by 42.2 percent to 1.380 billion euros, with the average mortgage down 4.3 percent at 100,180 euros. House prices in some parts of the country have fallen by over 40 percent from their peaks around the end of 2007 and the start of 2008.
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These days, with the crisis still raging, seven out of every 10 home purchases in Spain are paid in full. Credit has dried up, and most of those properties still being bought up are paid for with savings or donations from family members.

house in Alicante 300x199 - Thanks to a fall in prices, many savers are opting to buy houses outrightThere is another explanation for all the upfront payments: the rise in foreign buyers, who now represent 17 percent of the total, according to figures from the Public Works Ministry. These international clients are paying with funds of their own or with bank loans secured in their own countries.

Before the real estate bubble burst, upfront purchases represented 37.3 percent of total sales, according to the Higher Council of Notaries. That rate has doubled, and in June it represented nearly 68.6 percent of all sales. A study by Pompeu Fabra University (UPF) shows that in the first quarter of 2013, just over 60 percent of transactions did not require a home loan.
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