How will the Brexit affect mortgage borrowing in Spain?
Following the UK’s decision to leave the EU in last Thursday’s referendum, we have spoken to senior contacts at several leading banks in Spain to get an idea of how the Brexit vote may affect Mortgage Direct and our clients. With no exceptions, the banks have told us it is “business as usual” in respect of mortgage lending to foreign buyers, including the British. For example, the president of Banco Sabadell, Josep Oliu, has conﬁrmed that they will not change their lending policy to UK nationals and residents as a result of the referendum.
The most obvious immediate impact for British clients has been the drop in the value of Sterling, which clearly makes buying Spanish properties more expensive for them, both in terms of cash required for the actual purchase and ongoing property costs, which of course includes their mortgage payments. Currently, the rate is around 1.20 Euros to the Pound, having dropped just under 10% since the vote to leave was conﬁrmed. The value may fall further but the UK Government has already said that it would take steps to shore up the Pound if necessary.
The weaker Pound will have an effect when banks calculate a client’s affordability status. For borderline clients, this may result in the mortgage being declined rather than approved. However, it’s important to realise that banks here always consider the exchange rate and if Sterling recovers against the Euro this will have a positive effect on the affordability status of British clients.
In terms of interest rates, the European Central Bank (ECB) has conﬁrmed it is ready to manage the impact on the ﬁnancial markets and the banking system as a result of Britain voting to leave the EU. They had already conﬁrmed on many occasions that rates will remain low for a sustained period and they want to continue to fulﬁl their responsibility for providing price and ﬁnancial stability in the eurozone.
How do we think Brexit will affect Spanish house buying in general?
Whilst it may be too soon to tell, we think that overall demand for Spanish property from overseas buyers won’t be greatly affected. For most people, buying in Spain is a lifestyle choice and the alternatives, such as buying in countries like Turkey or Greece aren’t an option for them. We may even see an increase in the number of UK nationals choosing to emigrate to Spain from the UK.
From Mortgage Direct’s experience so far since the result was announced, we have seen a very small decrease in mortgage enquiries from British clients. Just one existing client, who was ready to purchase, has pulled out all together, which is mainly due to the exchange rate movement. We have also had two potential clients who have e-mailed us to conﬁrm that they are even more determined to move to Spain as ﬁscal residents now that the UK has voted out (even if their UK homes have fallen in value by the time they come to sell them and their spending capacity to buy in Spain is reduced). Finally, a UK client who completed last month has got in touch today to seek the possibilities of a 2nd purchase with a 2nd mortgage here in Spain.
There have been several events or crises in the last 10 years that were expected to result in drastically reduced numbers of British and foreign buyers. Focussing on British buyers once more, we must remember that it was only 3 years ago that the exchange rate was 1.15 Euros to the Pound and at the end of 2008 the two currencies were close to equal value but still, Brits continued to buy in Spain despite the nervousness at the time that they wouldn’t. On the contrary, the numbers have been increasing steadily over time.
So, the next few years are certainly going to be interesting both politically and economically. Whilst we realise that many of our clients will be nervous about buying in Spain, we also believe that the vast majority will still pursue their dream of buying properties here. Property prices are very low, mortgage interest rates look set to remain low for an extended period and Spain remains the most popular destination for British tourists and second-home buyers.
Taken from Mortgage Direct. Find out more at www.mortgagedirectsl.com
Here at Lucas Fox we remain optimistic about the Spain property market following Brexit. According to the Mortgage Direct article, now is still a fantastic time to purchase property in Spain and Lucas Fox always has a plethora of properties on offer. Today we have selected some top properties from around Spain all for around €750,000.
2 Bedrooms, 2 Bathrooms
Size 97m² (1,044ft²)
Terrace 53m² (570ft²)
This fantastic apartment forms part of a totally renovated building in the sought-after Justicia area of Madrid. The property offers 2 spacious bedrooms, plus 2 bathrooms and a private patio which is perfect for enjoying the climate in Madrid. The apartment is in a great location, close to the Barcelo market, Plaza del 2 de Mayo, plus an assortment of shops and chic restaurants. This property would be a great opportunity for an investor.
2 Bedrooms, 2 Bathrooms
Size 115m² (1,237ft²)
This apartment is part of an impressive new Marlet 1 development in the much-desired Gothic Quarter of Barcelona. The property is situated in a prime location, just next to the Ancient Synagogue. The apartment has been finished to a marvellous standard and benefits from modern features whilst being in the heart of historical Barcelona. This property would be a great purchase due to the unbeatable location and proximity to transport links.
3 Bedrooms, 2 Bathrooms
Size 172m² (1,851ft²)
Plot size 865m² (9,310ft²)
This pleasant property is situated in a delightful, residential area close to desirable Blanes. The property boasts 3 bedrooms, 2 bathrooms plus a beautiful use of outdoor space which includes a terrace with breathtaking sea views and plenty of space. The house is in a secure cul-de-sac and is located close to the beach. This property would make a lovely family home and comes in great condition.
3 Bedrooms, 2 Bathrooms
Size 160m² (1,722ft²)
Terrace 47m² (505ft²)
This house is a fantastic opportunity, and also a rare one. The property not only offers 3 bedrooms and 2 bathrooms, but also comes with a 10m mooring in Port Saplaya’s harbour. The house is well designed and offers direct access to the mooring from the terrace. The property also boasts its own gym facilities along with other items in the basement. In the urbanisation the house benefits from use of 2 swimming pools, plus tennis courts nautical club.
4 Bedrooms, 3 Bathrooms
Size 135m² (1,453ft²)
Plot size 140m² (1,506ft²)
This property is a great example of some of the luxury property available in trendy Sitges. The property boasts 4 bedrooms, 3 bathrooms, plus terraces and a private garden. The property forms part of a very exclusive development in the city which contains a garden, a swimming pool plus 24 hour security. The house is presented in excellent condition and situated on the beach promenade of Sitges.
For more properties throughout Spain please visit www.lucasfox.com