Mortgages in Spain 2007 (Market Guide)

Spanish house prices have risen sharply every quarter for more than 10 years, making the Spanish housing market one of the most impressive performers in the EU. What are the current issues facing the Spanish mortgage market? How are housing policies affecting its performance? Who are the biggest lenders? What will be the size of the sector in the next five years? This report provides the answers.



Report Highlights
Strong competition coupled with the relatively high rate of inflation in Spain has meant that real interest rates on loans have been extremely low for a number of years, helping to stimulate mortgage demand and house price growth. However, since the fourth quarter of 2005, typical mortgage rates have been increasing steadily. Outperforming most of Europe's surging mortgage markets in recent years, mortgage lending in Spain has expanded rapidly to reach EUR569.3 billion in 2006. Indeed, mortgage lending balances have grown by a compounded average rate of 21.4% per year since 2002, according to the EMF. By the end of 2006, outstanding covered bonds backed by mortgages amounted to EUR214.8 billion whereas new issues amounted to EUR69.9 billion in 2006.


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Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Market size 2
Market forecasts 2
Key issues 3
Key market players 4
Contents 5
Figures 6
Tables 7
Market Context 8
Country overview 8
Demographics data on a selection of major western European countries 10
Population 10
Economy 11
Housing market 16
Dwelling stock 16
House prices 19
Government housing intervention 19
The government is attempting to make more housing affordable for lower income groups 20
In addition, it is trying to boost the rental sector 20
Market data 20
Mortgage interest rates 20
Market size 21
Balances outstanding 21
Gross advances 24
Product lines 25
Market structure 26
Categories of banks 26
Private commercial banks 27
Cajas de Ahorros (savings banks) 27
Co-operativas de Crédito (co-operative banks) 27
Mortgage market structure 27
Market share by player type 27
Funding 28
Distribution 28
Regulatory environment 29
Industry regulators 29
Banco de España 29
Industry associations 30
Asociación Española de Banca (AEB) 30
Confederación Española de Cajas de Ahorros (CECA) 30
Unión Nacional de Cooperativas de Crédito (UNACC) 30
Asociación Nacional de Establecimientos Financieros de Crédito (ASNEF) 30
Asociación de Usuarios de Servicios Bancarios (AUSBANC) 30
Credit bureaus 31
Banco de España manages a public registry 31
Equifax operates a private sector credit bureau in Spain 31
Experian entered the market in 2000 31
Regulatory issues and developments in the mortgage market 31
The birth of an integrated European mortgage market is still very far off 31
Basel II will mean a number of changes for lenders 31
Spain was the last European country to adopt the Code of Conduct for Home Lending 32
Recent national legislation 33
The government is working on a sweeping Modernization Law for the mortgage market 33
Key issues 34
Competitor and Product Overview 35
Top five mortgage lenders 35
Market share by balances outstanding 35
Product analysis 37
Typical product characteristics 37
Market Forecasts 39
Forecasting gross advances 39
Datamonitor forecasts a considerable slowdown for the Spanish mortgage market 39
Future prospects 41
Market attractiveness 41
Market inhibitors 42
APPENDIX 43
Supplementary data 43
Tables relating to Chapter 2: Market Context 43
Definitions 45
Balances outstanding 45
CAGR 45
Capped mortgage 45
Fixed rate mortgage 45
Gross advances 45
Loan-to-value (LTV) 45
Mortgage intermediary 45
Remortgaging 45
Tied agent 45
Unemployment rate 45
Variable mortgage 46
Research methodology 46
Further reading 47
European Mortgages 47
Ask the analyst 47
Datamonitor consulting 47
Disclaimer 48

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Table 1: Forecast of residential mortgage gross advances in the Spanish market, 2005-11f, (€m) 2
Table 2: Total population across major western European countries, 2002-06 10
Table 3: GDP at current rates across major western European countries, 2002-06, (€ billions) 11
Table 4: GDP per capita at current rates across major western European countries, 2002-06, (€) 12
Table 5: GDP growth rates across major western European countries, 2002-06, (%) 13
Table 6: GDP composition by sector across major western European countries, 2006, (%) 14
Table 7: Inflation across major European countries, 2002-06, (%) 15
Table 8: Unemployment rates across major western European countries, 2002-06, (%) 16
Table 9: Dwellings in Spain by year of construction, 2001 18
Table 10: Residential mortgage balances outstanding in Spain compared to GDP of selected European countries, 2006 23
Table 11: Top five mortgage lenders in the Spanish residential market in terms of balances outstanding, 2005-06 36
Table 12: Forecast of residential mortgage gross advances in the Spanish market, 2005-11f, (€m) 40
Table 13: Total dwelling stock in Spain, 2001-05, (000s) 43
Table 14: House price growth in the Spanish residential mortgage market, 2002-06 43
Table 15: Typical mortgage interest rates in the Spanish residential market, Q3 2004-Q3 2006 44
Table 16: Mortgage balances outstanding in Spain, 2002-06, (€m) 44
Table 17: Net mortgage lending in Spain, 2002-06, (€m) 44
Table 18: Mortgage gross advances in Spain, 2002-06, (€m) 44


Figure 1: Mortgage gross advances in the Spanish market have grown strongly, 2002-06 2
Figure 2: Santander is the leading mortgage lender in Spain, 2005-06 4
Figure 3: A snapshot of Spain's key statistics, 2006 9
Figure 4: Spanish housing stock grew strongly, 2001-05 17
Figure 5: Owner occupation is high in Spain, 2004 18
Figure 6: Average house price growth in Spain has slowed in recent years, 2002-06 19
Figure 7: Typical mortgage interest rates in Spain stood at 4.7% in Q4 2006 21
Figure 8: Mortgage balances outstanding in Spain saw strong growth from 2002-06 22
Figure 9: Net lending in Spain saw strong growth from 2002-06 24
Figure 10: Mortgage lending gross advances in Spain witnessed strong growth from 2002-06 25
Figure 11: The three pillars of Spanish banking, 2007 26
Figure 12: Examples of banks in each of the three pillars of Spanish banking, 2007 27
Figure 13: Regulatory overview of the Spanish banking sector, 2007 29
Figure 14: Santander is the leading mortgage lender in Spain, 2005-06 35
Figure 15: Datamonitor forecasts that the Spanish mortgage market will grow at a much slower pace over the next five years than witnessed previously, 2005-11f 40


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