The recent change to Spain´s mortgage law, which has been covered in The Weekender, is on first sight excellent news for home buyers, as the banks have to cough up more of the up-front costs of purchasing a property.
It is not surprising though, that according to the Bank of Spain, the lenders are trying to recoup their extra outlay by increasing their borrowing charges, even before the new law came into effect last month!
The latest survey looking at the housing and mortgage market from the Bank of Spain reveals that new mortgages in Spain have been getting steadily more expensive for months, especially compared to other types of credit, and also compared to mortgages in neighbouring countries.
The Bank estimates that interest rates on new mortgage loans have increased by 30 base points in recent months, which “has not been observed in other countries in our region,” says the Bank report looking at the months between April and June of this year.
The higher interest costs of Spanish mortgages “could be related to the legislative changes introduced in our country in recent months relating to real estate loans and house sales.”
The Bank´s reference was to the new mortgage law passed in March making lenders shoulder the cost of mortgage stamp duty and other costs, has apparently seen them passing that hike onto borrowers in the form of higher interest charges in an unsurprising twist in the tail.